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Forex – Copper Prices Could be Headed Lower to Test Feb Lows

Forex – Copper Prices Could be Headed Lower to Test Feb Lows

2014-02-14 18:24:00
Research, Research Team
Share:
Forex-Copper-prices-could-be-headed-lower-to-test-February-lows-0021_body_copper.jpg, Forex – Copper Prices Could be Headed Lower to Test Feb Lows

Highlights:

Copper prices are trading mostly flat for the week, settling at $3.248 on Thursday, after closing the previous week at $3.244 per pound, with gains of 1.63 percent for the week. Copper prices have dropped more than seven percent this year from the highs of $3.42 per pound on January 2nd. Copper for March delivery; the front- month contract on the COMEX, settled at $3.250 per pound on Thursday, rebounding from the session lows by almost a percent.

The price of copper was supported by a rebound in global stock markets, which were on a downward spiral since the second half of January on the back of the Federal Reserve cutting down on its QE program followed by dismal economic releases. According to the Commitment of traders, hedgers were net short by about 5k contracts and large speculators net long by about 10k contracts. Open interest declined by about 3k contracts during the most recent week.

Forex-Copper-prices-could-be-headed-lower-to-test-February-lows-0021_body_Image57.jpg, Forex – Copper Prices Could be Headed Lower to Test Feb Lows

The Week Ahead

Technical View:

Main Points:

• Near term trend weak

• Holding near key bullish breakouts

Copper prices rebounded after grazing important supports at $3.150 per pound; the bottom end of the bullish channel highlighted in blue. A closer look at the trend from January indicates prices have been tugging lower, creating lower tops and lower bottoms and until this trend is reversed, copper prices are expected to remain weak.

In the near future, expect copper prices to be locked between supports at $3.150- 3.200 (the bottom end of the medium term bullish channel connecting the lows of June last year and February this year) and $3.270- 3.300 (the near term bullish breakouts). However, if copper prices close above $3.300, it would signal a near term reversal with prices likely to target $3.450- 3.600. Watch out for the bullish breakouts before initiating long positions on the metal.

Strategy:

Initiate short copper positions from $3.265- 3.280, with a stop and reverse if the price of copper closes above $3.300.

Forex-Copper-prices-could-be-headed-lower-to-test-February-lows-0021_body_Image58.jpg, Forex – Copper Prices Could be Headed Lower to Test Feb Lows

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