Technicals | Jul 10 2014
Bottom Line 08/07/14:
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 300 / 293 / 285
Resistance Levels: 339 / 377 / 400
Technical Discussion
Copper had its first fall post a week of gains on signs of increased supply. Yet the recent run higher has put price at 5 month highs and this continues to be seen as a positive development. Even more so technically which we will discuss in more detail below. With recent reports now revealing U.S unemployment at 6 year lows, there is speculation that demand will rise as the overall global economic outlook continues to improve.
Reasons to be optimistic (be it caution remains):
→ improving demand in China and U.S.A anticipated
→ technical factors improving and the recent swing higher being impulsive is positive
→ caution though until the break out move proves it can hold
We wont be overly concerned if a dip ensues from here to unwind the overbought daily and weekly divergence indicators. Yet we wouldn't want to see any such weakness push below the 310 – 315 price zone. This is the area that retests the break we have recently witnessed out of the longer term descending triangle that has been in play since early 2011. Very early days here, yet we were always going to start getting more positive about Copper if price could make a convicted move above 320. The push higher on 30 June , followed up by the key outside reversal day on the 2nd July on increased volume, is exactly what we wanted to see. As stated though it is now all about the move sticking and proving itself to be the real deal. A minor dip is therefore of no concern shorter term and in fact is something we are now expecting. The support zone mentioned though should bring out buyers and it is also backed by the 200 moving average which now has the potential to start acting as a rising line of support within itself. Something that has not been witnessed for a number of years. Early days yet potentially looking good.
Trading Strategy
We have backed our analysis with a trade to the long side at 320 with stops initially below 300. No problem from here as mentioned with a dip down towards 310 – 315, yet a red flag will start to wave below 310. So a healthy retest of the break out zone yet nothing more sinister is the expectation. With a higher swing low pattern post dip being the icing on the cake.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
Risk Disclosure Statement
THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.
Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
