- The copper market fell pretty significantly during the trading session on Wednesday, as we have seen a lot volatility out there, in an environment that seems to be very uncertain.
- Interestingly enough, it was during the same session that we got word from Donald Trump that the Americans and the Chinese may possibly have come to some type of trade agreement.
- You would suspect that copper would be a big winner here, but it does look like it is struggling a bit, and therefore you also have to keep in mind that price is the only thing that truly matters, not necessarily what the market “should do.”
Technical Analysis
The technical analysis for the copper market is essentially range bound, as we had seen pretty significant selling previously, to reach down toward the 50 Day EMA. The 50 Day EMA of course is closer to the $4.75 level, and is rising. With that being the case, I think you have a situation where traders will continue to step in and try to pick up copper, and it’s probably worth noting that the $5 level is an area that will matter over the longer term. It’s a large, round, psychologically significant figure, and an area where we have seen a lot of action previously. To break above there could be traders jumping in and taking advantage of momentum coming back into the market.
Because of this, I think you’ve got a lot of anticipation in this market, and it is probably worth noting that copper is an extraordinarily important market when it comes to the overall global growth situation, as it is in high demand in places like China that are growing. If we were to break down below the 50 Day EMA, that probably suggests that the market is going to go much lower, perhaps down to the 200 Day EMA near the $4.50 level. I don’t necessarily worry about that, but it is a very realistic situation that could occur.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.