Can Dr. Copper Heal Thyself
Today’s Spotlight Market
The fundamentals for Copper in 2015 seem to favor the bears as the market is expected to be in surplus. It is estimated by analysts that the global Copper market will see a 500,000 ton surplus next year due to added supplies and a slow growth world economy. Demand from China, the world?s largest user of commodities, is expected to slow as the world?s most populous nation is expected to see slower economic growth in the coming months.
Fundamentals
It?s been over 4 years since traders have seen Copper prices this low, as fears of slower global economic growth and a rally in the value of the U.S. Dollar have perpetuated a bearish trend in commodity prices including Copper. The ?red? metal received a dose of bearish news as China?s Manufacturing Purchasing Managers Index fell to 50.3 in November, which was the lowest reading in 8 months. While the current outlook for Copper prices appears to be negative, current price levels may force producers to begin to limit the expansion of Copper mines which should help to prevent the potential for overproduction in the coming years. This should help to place an eventual floor for Copper prices, but an eventual low may not be put into place for months in the future.????? ?
Technical Notes? -? View Today’s Chart
Looking at the daily continuation chart for Copper futures, we notice a large descending triangle formation on the daily chart. This technical formation is considered a continuation pattern formed in a downtrend, where prices consolidate prior to a resumption of the major trend in place. Prices are currently holding above the major low of 2.7200 made back in June of 2010, but if this key support level fails to hold, there is not much in the way of support until the 2.4400 price level. The 14-day RSI is weak with a current reading of 36.84. Resistance is seen near the 2.9550 price level.
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