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Copper Joins the Commodity Sell Off

Market Analysis

Copper, Daily               

The sharp (over 3%) decline in the Gold price on Tuesday had a ripple effect out to other commodities notably Silver and Copper this week too. Of the three key metals it was the copper chart that looked the most interesting.  The tweezer top completion on Monday was followed by Tuesdays continued decline and the break and breach of the 20 DMA yesterday confirmed my entry at 2.1555.  The 50 DMA could provide some short term resistance to a move lower. Target 1 is at the confluence of the recent 50.0% Fibonacci retracement level, the 200 DMA and a little over the 14 Day ATR at 2.1325. Should the 200 DMA not provide support them the next leg lower will be Target 2 at the 61.8 Fibonacci level around  2.1170 .

Fundamentally, Copper is in a strong bear market that has been in place for some six years and although September provided further consolidation and a bounce from the floor at 2.0640, the longer term view remains negative. A significant upturn in demand (particularly from China) and the rhetoric from the USA, Europe and the UK regarding infrastructure expenditure would need to be implemented and sustained before copper breaks this long term downtrend.


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Stuart Cowell

Market Analyst


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