Commodities

Technical Analysis – Copper futures plunge lower to a multi-year low

Posted on March 16, 2020 at 4:31 pm GMT

Anthony Charalambous, XM Investment Research Desk

Copper futures plunged to a fourty-month low of 2.6204 today before buyers resurfaced. The correction in the price was also reflected in the bounce of the RSI on the 30 oversold mark and the recent turn up in the Stochastic blue %K line towards its red % D line just beneath the 20 level.

That said, the MACD is declining below its red trigger line in the negative zone and the simple moving averages (SMAs) still display a negative picture as they are all sloping downwards.

To the downside, immediate support may come from the fresh multi-year low of 2.6204 and if sellers manage to steer below, the commodity could drop to see the 2.2800 barrier coming from back in May 2016. Diving down, the 2.2514 obstacle – which is the 261.8% Fibonacci extension of the up leg from 2.4889 to 2.6351 – and the 2.2400 hurdle underneath, from July 2016, may challenge sellers’ efforts to push even lower.

Otherwise, if buyers drive above the 2.3974 and 2.4090 inside swing lows respectively, the next obstacle to further upside moves could come from the 2.4785 mark. Overcoming this, the 50-period SMA at 2.5030 and the 2.5084 high overhead could apply some friction ahead of the swing peak of 2.5274. Sustaining the climb, the 100-period SMA at 2.5360 and the 200-period SMA residing at the swing top of 2.5589 may prove a difficult point to conquer.

Summarizing, the short-term outlook continues to appear bearish below the 2.5274 level and a close below 2.3321 would reinforce this view.

HGCOP

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.