One of the over-ooked commodities and economic indicators is lumber.
And more specifically, the price of lumber.
The price of lumber has been on the rise since the 2008 financial crisis, but lumber futures prices went haywire following the onset of COVID in the spring of 2020. Shortages and recovering economic demand spurred prices higher and higher and higher.
One can easily see all this in today’s “monthly” chart of lumber futures. The move higher came after finally breaking out above importance resistance marked by 4 red arrows at (1). That took lumber prices to $1,500. More precisely, Lumber rose from $300 (COVID crash low) to $1,500 in a matter of months.
But then it created a bearish reversal pattern (which we highlighted in early June) and began to form the very ominous “Eiffel Tower Pattern.” This pattern is where price has the ability to fall all the way back to the base (beginning) of the rally. In this case its $300.
Lumber futures are currently testing important price support (old resistance) at (2). If support breaks here, then lumber could fall all the back down to $300.
Big question: Has lumber completed its “Eiffel Tower pattern?” Or, will it fall to the 300 level to complete the pattern? Stay tuned.