Geopolitical tensions surrounding the Russia/Ukraine war have sent steel prices higher.

And if the rally continues, it may mean considerably higher steel prices and added inflationary pressure.

Today’s chart from Marketsmith takes a “weekly” look at the Steel ETF (SLX). As you can see, prices are elevated.

Back in 2018, steel double topped at (1). But since that time, price has lifted above that area creating new support… and what appears to be a double bottom at (2).

As steel prices push higher on supply chain concerns, a big test awaits at (3) on today’s chart. This is a big level for Steel and what happens here will send a macro message to the world.

If Steel would break below support at (2), recession risk increases. What Steel does with (2) or (3), will send a very important macro message.