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    Technical Analysis #C-COPPER : 2016-02-17

    Increased import to China

    Copper is edging up for several days already. China increased its import to 440 thousand tonnes in January which is 5.3% above the level of the same month last year. Another positive factor for most nonferrous metals is the general rebound in the global stock markets which started on Friday on the improved retail sales in USA. Will the copper prices continue rising?

    China accounts for 45% of the global copper production so its economic data have significant influence on the copper prices. China’s bank lending soared to the record 2.51trn yuan in January, the data came out on Tuesday. This is far above the forecasted increase of 1.9trn yuan. Money supply rose 14% year-on-year which is also above the expected increase of 13.5%. Market participants assume the Bank of China may continue giving monetary stimulus to the economy. Finally, this may support the economy’s expansion and the demand for copper. However, the major British bank Standard Chartered claimed on Tuesday it was expecting the contracted imports of this metal to China. In fact, the price growth halted on this news that day. Among the positive factors are the plans of Glencore, Antofagasta, Freeport McMoRan to limit the copper smelting volumes due to the low commodities prices.

     

    Copper

    On the daily chart Copper: D1 is moving sideways and is retracing from the 7-year low hit in mid-January 2016. The Parabolic indicator is still giving sell signal. MACD has formed no signals as its histogram bars are too low. RSI is on the rise and above 50 having formed the positive divergence. The Bollinger bands have contracted a lot which means lower volatility. The bullish momentum may develop in case the copper surpasses the last fractal high, the Bollinger band and the Parabolic signal at 2,138. This level may serve the point of entry. The most risk-averse traders may wait for the prices to surpass the 1st Fibonacci retracement and the upper bpunday of the ascending channel at 2,178. The initial risk-limit may be placed below the 7-year low at 1.938. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 1,938 without reaching the order at 2,138 or 2,178, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

     

    Position Buy
    Buy stop above 2,138 or 2,178
    Stop loss below 1,938

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