Technical Analysis #C-COPPER : 2019-01-29

[IFC Markets]

Global copper deficit persists

According to the International Copper Study Group (ICSG), over 10 months of 2018, the global copper deficit has amounted to 545 thousand tons. Will copper prices rise?

World copper consumption in January - October 2018, increased by 2.8% compared with the same period of 2017. At the same time, its consumption in China increased by 7%, and copper imports to China - by 25%. This country consumes nearly half of copper mined in the world. Let us note that on February 4-10, there will be days off in China in connection with the New Year celebration according to the lunar calendar.

On the daily timeframe, Copper: D1 has been in a neutral trend for already 7 months. Now it is moving towards its upper boundary. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of an increase in world demand.

• The Parabolic indicator gives a bullish signal.
• The Bollinger bands have narrowed, which indicates low volatility. The lower Bollinger bands is titled upwards.
• The RSI indicator is near 50. No divergence.
• The MACD indicator gives a bullish signal.

The bullish momentum may develop in case Copper exceeds the last fractal high and the upper Bollinger band at 2.75. This level may serve as an entry point. The initial stop loss may be placed below the three last fractal lows, the low since June 2017, the Parabolic signal and the lower Bollinger band at 2.54. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (2.54) without reaching the order (2.75), we recommend to close the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis


Position Buy
Buy stop Above 2.75
Stop loss Below 2.54