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Hugo in HTO Trading,

Copper: Double bottom confirmed

The distresses across the equity markets seem to be never-ending. However, trouble in the German corporate sector isn’t exactly helping but, clearly, it’s still China’s weakness that is keeping the pressure on markets. And yet, if we can predict a turnaround in China, we can predict another bullish push in the markets.

Because copper demand is strictly tied to growth in China, as it represents 40% of copper consumption, it is crucial to figuring out what is happening with China. Since the last time we covered this topic, two things have changed. Firstly, copper ended up sliding lower. And secondly the focus has shifted from how copper will signal the end of China’s sell-off to how global indices could regain their momentum while Chinese indices are left on the sidelines.

The commodity since the beginning of the year fell more than 14.0% and is in a recovery phase since the start of October. Last week copper rallied for the 2nd straight week with a narrow range and close near the high of the week on average volume. The Stochastic is showing a slight bullish momentum although is still below the 50 mid line.

Expecting an upward move to a key level at 265.95 on a break above a weekly resistance at 249.80 (scenario 1) or a break below a weekly resistance at 241.45 could push the commodity down to 227.85 (scenario 2).