Copper in a balancing act
Early this year the copper price climbed to an all-time high. It has dropped some 30 percent since and has entered a bear market. The sentiment is dampened by an uncertain outlook for the Chinese economy. Aggressive tightening by the Federal Reserve and the ensuing rally in the US dollar has also weighed on the price. The inverse relation between the copper price and the US dollar is illustrated below:
From a technical perspective, copper has reached an important target of the Fib 50 retracement at around USD 3.45 (as calculated from the covid low of 2020). It is also balancing close to the weekly MA200 level of some USD 3.4. This level is a significant support to watch. From the charts, we interpret that copper is in a possible bearish pennant pattern. Normally, when the price breaks out, it should continue the prevailing trend – in this case, downwards.
If so, we believe the first natural target is the year low of around USD 3.24 per pound, with the Fib 61.8 level at USD 3.08 as the next stop.
Copper (USD per pound), daily 12-month price chart
Bull & Bear-Certificates
Copper price (USD per pound), October 2017 to October 2022
The full name for abbreviations used in the
previous text:
EMA 9: 9-day exponential moving average
Fibonacci: There are several Fibonacci lines used in technical analysis.
Fibonacci numbers are a sequence of numbers in which each successive number is
the sum of the two previous numbers.
MA20: 20-day moving average
MA50: 50-day moving average
MA100: 100-day moving average
MA200: 200-day moving average
MACD: Moving average convergence divergence
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