Copper Takes a Beating

Copper Takes a Beating

The price of copper took a beating and was down 1.33% at $6,468 a metric ton in London, with the rest of the base metals complex also firmly in the red.

Copper prices have dived by more than 7% since hitting their three-year peak on Sept. 6. Just a week ago copper hit an intra-day high just shy of $3.18 a pound (more than $7,000 a ton), the highest since September 2014.

“This correction in copper markets is overdue as speculative interest has been running ahead way of industry fundamentals” HEFFX said in a note to traders, long term we remain bullish on Copper and will be buyers again at under $3 they added.

The big speculation came after unconfirmed reports that at the end of July China is planning to ban the importation of scrap copper by the end of next year, that is what sparked the rally from copper’s summer lows.

COPPER closed down -0.030 at 3.016. Volume was -0% below average (neutral) and Bollinger Bands were 33% wider than normal.

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

COPPER gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.

COPPER is currently 12.6% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect very strong flows of volume into .BRHG (bullish). Our trend forecasting oscillators are currently bullish on .BRHG and have had this outlook for the last 77 periods.

HEEFX momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

Candlesticks Confirm Trend

During the past 10 bars, there have been 0 white candles and 0 black candles. During the past 50 bars, there have been 0 white candles and 0 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 19 falling windows in the last 50 candles–this makes the current falling window even more bearish.

A gravestone doji occurred. This often signifies a top (the longer the upper shadow, the more bearish the signal).

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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