Copper – Fundamental Vs Technical Analysis

Copper continues to move in a sideways pattern as the political uncertainties continue in Washington. Another day of fruitless conversation between the Democrats and Republicans over the US government shutdown has passed and there is still no resolution in sight. Traders are even more cautious as this could have serious consequences for the global economy which could hurt the demand for copper.

The only good news for the market was the announcement that Janet Yellen would be a new replacement for Fed Chairman Ben Bernanke when he steps down in January. As she is a dove, therefore there is more possibility of no tapering which could be a good news for copper. However the question remains that the self destructiveness which politicians are causing the US economy could be recovered soon by Janet Yellen’s band aid.

The only hope for traders is that the Presidents Obama’s speech in which he said that he is ready to negotiate with the Republicans including the health care plan, but only after the government shutdown has been lifted, could make the Republicans come back to the table and resolve this matter.

Technical Analysis
Focus: The bias for copper remains to the upside and the price need to break above the 3.38 resistance zone to confirm its upward trend. The break of the 3.39 level will further open the floor towards its next target of 3.55.

Strategy in Play
Copper has formed a symmetrical triangle pattern on a 4 hour time frame. If this pattern breaks to the upside we could easily see the price near the 3.46 level. However, the price is trading below the 50 day (shown in green) and 100 day (shown in yellow) moving average which confirms that the bulls are losing their control.

Important level

3.25-3.23 Support

3.41-3.39 Resistance

by Naeem Aslam