A.) Prices have been in an uptrend for several months.
B.) Prices have consolidated gains as they have moved higher.
C.) Yesterday prices broke their upward trend.
Trend breaks provide important information. First, we know that something has fundamentally changed in the way the traders look at a security. An uptrend trend says traders see higher prices (duh). But when that trend changes something has changed in the way traders look at that security. Now -- the question is what changed yesterday?
China's surprise move Tuesday to increase the amount of funds banks need to keep on hand likely reflected its growing unease over the outlook for inflation, but analysts were divided over whether the move marks a complete change in stance for monetary policy.
This means it will be harder for Chinese firms -- who are major commodities consumers -- to purchase raw materials.
