Commodities

Technical Analysis – Copper futures lacks clear direction in medium term

Posted on January 24, 2019 at 1:49 pm GMT

Melina Deltas, XM Investment Research Desk

Copper futures with delivery in March 2019 have been trading in a consolidation area over the last five months with an upper boundary the 2.8530 resistance level and lower boundary the 2.5480 support. Currently, the price is trying to sink below the 20-simple moving average (SMA) in the daily timeframe, sending the market towards the lower boundary of the range.

While the technical indicators continue to slow down, mirroring the market’s weak behavior over the last three days, the RSI indicator is moving in bearish territory, flagging that a downside move could reemerge in the short term. The MACD is also holding below its zero line, which supports the neutral to negative view as well.

In case the price continues to move lower, the next immediate support is coming from the 2.5480 – 2.5395 strong area. A penetration of this line would erase the sideways channel and drive prices until the 2.5320 obstacle.

Alternatively, in case of a bounce up the price could reach the 23.6% Fibonacci retracement level of the downleg from 3.3290 to 2.5395, around the 2.7220 resistance level. However, the price needs first to successfully surpass the 40-day SMA. Above this area, another potential barrier for upward movements could come around 2.8010.

Summarizing, copper prices maintain neutral bias in medium-term picture, while in the longer timeframe, the market remains in negative structure.

commodities copper

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.