Technical view-Comex copper below $1.50 a lb.

December 9, 2008

coppermonthly1

Investors had their eyes keenly trained on New York copper’s $1.50 per lb. level before it broke down last week. On the COMEX exchange, copper teetered above the psychological $1.50 threshold before diving through on Thursday, triggering stop-loss sell orders on the way down. Then on Friday,  shockingly dismal U.S. jobs data shoved copper down to $1.3560 a lb, its lowest point since February 2005.
Copper had at that point lost two-thirds of its value off its record high set in July.
Investors saw March copper as oversold and sent it back above $1.50 on Monday. But some technical analysts caution against celebrating the upswing too soon. They viewed Monday’s advance as a bear market rally and a short-selling opportunity.  “It may be an opportunity to sell short, because the trend is down. It’s certainly overdone, but it had fallen to a significant downside target,” said technical analyst Hans Kashyap, president of Analytics Research Corp in California.
Some participants took advantage of the gains and grabbed short-term profits on Tuesday.
Looking at a monthly chart and using basic technical analysis, Kashyap projected copper’s downside objective in the $1.40 to $1.35 a lb area, precisely where it stopped on Friday.
To find that target, he took a measurement off the 2006 high at $3.99 a lb down to 2007′s low at $2.3980. He explained that for the last two years copper had made several attempts at the $4.0 level, actually flitting above it several times. But the $4.0 resistance level failed repeatedly to definitively give way, despite numerous forecasts earlier this year for $5 or $6 copper.
Though the $1.35 downside target has held since Friday, Kashyap said he would need to see a protracted period above that band to think a bottom had been established.
To think copper had turned a corner, Kashyap said he would need to see it hold above the $1.40 to $1.35 area for several weeks. Though a brief break beneath $1.35 would not be significant.
“To have any confidence in the upside, I would need to see at least a couple of weeks basing and holding that area and then pushing through the next step at the $1.77 area.”
If $1.35 support breaks, and if the current economic downturn persists that may well happen, Kashyap’s next projected downside target lies at $1.0660.
“We could get down to that swing low. But that would be a worst case scenario.”

Comments

I see a golden future for gold because when people panic they go for the gold, but copper is an industrial metal and it will be a while until we pull out of our economic crisis.

 

Copper is volatile like the other semi precious metals.

Gold is secure for the time being and the more money they create, the more it will rise in my opinion

 

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