The rally for copper finally came to an abrupt halt yesterday as weak economic trade data news from China dealt the base metal a mortal blow, sending it plunging lower and closing the session with the wide spread down candle on very high volume, and signalling the end to the rally of September.
As global markets return to business after the summer recess, and commodity markets attempt to find some much needed traction, the story for copper is very different as it continues to remain range bound and waterlogged across all the slower time frames.
After the malaise of the last few months, copper finally nailed a key technical level firmly into place on Friday as the red metal surged higher, closing the session with a wide spread up candle supported with excellent volume, thereby confirming the validity of the move higher.
The start of the new year has seen no let up in the torrid time for commodities and commodity currencies, but for copper the continued uncertainty in China (FXI, quote) coupled with US dollar (UUP, quote) strength and lack of global economic growth continues to weigh particularly heavily, with the base metal breaking through the psychological $2.00 per lb price point, and currently trading at $1.965 per lb at time
Speculation on China’s demand for copper (JJC, quote) has sent copper to a seven week high this morning of $3.09 not seen since March 7th.
Let me start with a quote from my last post on copper where I wrote the following: “……and for any recovery longer term, we will need to see a dramatic buying climax, and given the extent of the current selling, an extended phase of congestion prior to any bullish momentum returning for copper.“
Doctor copper is anything but on the daily chart, as the May futures contract traded lower once again today, following yesterday’s sharp sell off, which saw the metal end the commodities trading session with a wide-spread down candle, finally propelling copper below the recent sideways price congestion which has been in place since early March.
