Copper Looks Weak Short-Term

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The recent bearish tone among the base metals suite seems justified by price action in copper according to the technical analyst at Barclays Capital, who notes old support at the 50% retracement levels of the February to May gains and the mid-August low at a range of US$6,730/6793 per tonne has successfully turned into resistance.

In the analyst’s view this keeps the recent downtrend in focus and suggests further weakness, with scope in the coming weeks for the price to test US$5,910 per tonne as a 78.6% retracement of the February to May gains, while the 2007 low of US$5,250 is also under threat.

If the price can rally above US$6,793 the technical analyst sees further near-term resistance at US$7,203 per tonne, which is the 21-day moving average. A close above this level would be needed to reduce the current downside pressure.

Longer-term the analyst expects the price to develop a large triangular correction that will ultimately see the price test its 2006 peak of US$8,800 per tonne.

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