Iron ore has slumped to its lowest level this year as a combination of deteriorating sentiment surrounding China's near-term steel demand outlook and bearish technicals continues to fuel selling pressure.

A breakdown from the symmetrical triangle the price had been coiling within for much of this year marked a decisive shift in sentiment. Since then, the technical picture has deteriorated rapidly, with the price carving out a series of lower lows and lower highs.

The price now trades beneath the 50, 100 and 200-day moving averages, all of which are sloping lower, while momentum indicators remain firmly bearish. MACD continues to deteriorate and RSI (14) has fallen to 23, one of its most oversold readings since late 2022. The price is also trading beneath the lower Bollinger Band, highlighting just how stretched the decline has become.

The break beneath ¥724.90 support in late July accelerated the bearish move, with the price slicing through minor support at ¥710 to place the focus squarely on the major support zone at ¥683. Having repeatedly held as support on multiple occasions last year, that is now the key level for traders to watch.

While the broader technical picture continues to favour short setups, how the price behaves around ¥683 may prove instructive as to where the next meaningful move comes from.

Should the price break and hold beneath ¥683, it would provide an opportunity to establish short positions with a stop above the level for protection, targeting the next major support zone at ¥660.

Alternatively, if ¥683 holds again, the combination of historically important support, RSI (14) at one of its most oversold readings in years and the price trading beneath the lower Bollinger Band increases the risk of a squeeze. In such a scenario, long positions could be set above ¥683 with a stop beneath for protection, targeting either ¥710 or ¥724.9, the latter former support that may now act as resistance.

Good luck!
DS