In the last five weeks copper prices are lower by 6% finding mild support at the 61.8% Fibonacci level just above $3.18. Expectations of a continued slowdown in China has weighed on futures. Since China's demand accounts for approximately 40% of the world's copper market, a contraction there will have a major influence on prices. The latest evidence of this slowdown came in the smaller figures in the purchasers manages index indicating that manufacturing and service sectors are losing momentum.
Volumes were relatively muted in base metals Monday as the next catalyst will be Janet Yellen's maiden Congressional testimony on Tuesday.
I see further downside and I expect to rallies to be short lived. As for March futures, I see resistance at the Fibonacci level just overhead near $3.28 in March. Though I will not trade copper, a further leg lower would lead me to believe that we could see pressure in other markets as Dr. Copper knows best.
Markets To Watch
In my opinion, stock markets and energies would be the most likely candidates.
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