On Tuesday, PBOC (Peoples Bank of China) announced they are providing 500 billion yuan of liquidity to the largest banks of China. As a result, copper rose heartily on the news to reach a significant technical level.
As we can see from the chart below, there is a daily resistance line at 3.22. When the news of PBOC’s stimulus broke, the metal rose to meet this technical level.
Since then, prices have repelled which gives us a clue about the overall trend. The trend remains lower so long as prices do not break above 3.22.
For those not familiar with why China matters to copper, China is a growing economy and a growing economy will likely build new houses, apartments and offices. These buildings need copper.
Chart created by Jeremy Wagner using FXCM’s Marketscope 2.0
