Copper Bulls Bend But Don?t Break
Today’s Spotlight Market
Copper inventories in Shanghai Futures Exchange warehouses fell to their lowest levels since February following a nearly 10% decline in the past week.? At the London Metal Exchange (LME) Copper inventories were holding steady at just under 338,000 metric tons. ?
Fundamentals
The recent correction in the U.S. Dollar bull market has renewed traders? buying interest in Copper, as the ?red metal? has had a slow but rather choppy price rise of late. While the weakening ?greenback? has been the main catalyst for the increase in commodity prices, Copper also has benefitted from expectations of increased stimulus out of China, as well as a rebound in prices of other industrial commodities such as Nickel, Zinc and Iron Ore. With China accounting for nearly half the world?s consumption of Copper, any signs of increased demand from the world?s most populous nation can have an outside effect on commodity prices and, in particular, Copper. While there have been some reports that short-covering buying has been behind the price recovery, a look at the Commitment of Traders report last week shows non-reportable traders (small speculators) doing the short-covering buying, as their overall net-short position fell by nearly 4,500 contracts. On the other side of the trade, non-commercial traders (large speculators) were adding to existing short positions, with an additional 5,092 new net-short positions added during the reporting period ending on April 21.? ?
Technical Notes? -? View Today’s Chart
Looking at the daily continuation chart for Copper futures, we notice the market has been in an uptrend following a major low made back in late January at 2.4200. Since that time, we have seen prices rally to as high as 2.9240 before selling pressure emerged. The recent market movement seen since mid-March could be construed as a bull flag technical formation. With prices currently hovering above the 20-day moving average but below the longer-term 200-day moving average, it is no surprise that momentum as measured by the 14-day RSI is rather neutral, with a current reading of 54.85. 2.8295 is seen as the next resistance level for July Copper with support found at 2.6475.
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