The sharp (over 3%) decline in the Gold price on Tuesday had a ripple effect out to other commodities notably Silver and Copper this week too. Of the three key metals it was the copper chart that looked the most interesting. The tweezer top completion on Monday was followed by Tuesdays continued decline and the break and breach of the 20 DMA yesterday confirmed my entry at 2.1555. The 50 DMA could provide some short term resistance to a move lower. Target 1 is at the confluence of the recent 50.0% Fibonacci retracement level, the 200 DMA and a little over the 14 Day ATR at 2.1325. Should the 200 DMA not provide support them the next leg lower will be Target 2 at the 61.8 Fibonacci level around 2.1170 .
Fundamentally, Copper is in a strong bear market that has been in place for some six years and although September provided further consolidation and a bounce from the floor at 2.0640, the longer term view remains negative. A significant upturn in demand (particularly from China) and the rhetoric from the USA, Europe and the UK regarding infrastructure expenditure would need to be implemented and sustained before copper breaks this long term downtrend.
Click here to access the HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register the next webinar will start in:
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.