Copper price outlook:
- Copper prices has organized an almost meaningful recovery in July. Just not quite yet as the greater technical hurdle remains overhead.
- The demand side has not recovered after news from China that the government is releasing stocks of industrial metals to cool their rallies.
- Trading is a function of both price and time; the technical uncertainty can be solved either by a price adjustment or by a larger lateral carbonate.
A little recovery so far
Copper prices have been under pressure since the end of May, when news came from China that officials were taking steps to curb the “unreasonable” rise in prices of industrial metals through the release of stocks. However, as the decline in US Treasury interest rates with US stock markets rises again to record highs, risk appetite continues to rise, providing narrative relief for hidden copper prices.
But it is true that the basic picture of copper prices has not improved either: according to Reuters, “oIn LME-registered warehouses, n-guarantee copper stocks have risen to their highest levels since May 2020, while Yangshan surcharges for metal going to China have barely.”
In other words, demand has not yet absorbed all the recent additional supply. The benefits observed since the end of June have so far proved to be only a small recovery, as technical resistance to the cluster is ahead.
VASHINNA TECHNICAL ANALYSIS: AGENDA (March 2020 – July 2021) (CARD 1)
At the end of May, it was stated that “before buyers return to the market, there may be a return to the previous annual level of 4.3755 set in February.” Copper prices fell briefly below their previous highs at the end of June, but were restored again in the first week of July, when prices rose by 23.6% Fibonacci before the 2020 low / 4.221 peak.
At present, momentum indicators are still working in a recently resold environment. Copper prices are above their daily 5-, 8-, 13- and 21-EMA envelopes, but not yet in sequential ascending order. The daily MACD is higher but below its signal lines, while the daily slow stochastics are already on the verge of returning to overbought territory.
Staying slightly below the peak of 4.3755 in February 2021, it seems that the junction of resistance still faces: the peak of July 4.4025; an upward trend from the slump at the end of February and the end of March; and an upward trend from September 2020 and February 2021. Overcoming this resistance to the merger would now lead to a stronger rise in copper prices.
VASHINNA TECHNICAL ANALYSIS: WEEKLY (November 2008 – July 2021) (CARD 2)
Perspective outlined in mid-February will remain in force: “The breakthrough of copper prices above the declining trend from the peaks of February 2011 and June 2018 indicates that a multi-annual bottom-up process began in mid-2020. This view is confirmed by the failed downturn in early 2020, when the multi-annual symmetric support of the triangle temporarily disappeared for a few weeks. “
“The emptying of the June 2018 peak officially ended the multi-year series ‘lower high and lower low’. As long as the upward trend from the March and October 2020 slumps continues, the copper price will maintain an upward trend.”
– Written by senior currency strategy CFA Christopher Vecchio