Daily September High Grade Copper

Comex High Grade Copper Futures Analysis – July 26, 2013

September High Grade Copper futures are under pressure this morning on demand concerns from China. It’s been no secret that China’s economy has been sluggish. This has been a contributing factor to the sell-off in the market the entire year, however, the heat was turned up a little last night after China ordered companies in 19 industries to cut excess production capacity. The details of the plan call for surplus capacity must be idled by September and eliminated by year-end.

The overnight news is expected to have a negative impact on copper prices since China accounts for about 40 percent of the world’s demand. The rate of the decline will either accelerate or slow down depending on when the market decides the Fed will begin tapering its monetary stimulus.

Recently, Fed Chairman Ben Bernanke said the central bank would remain accommodative and likely act on stimulus before the end-of-the-year. About mid-week, investors began to price in the possibility the tapering would begin as early as September. This helped form a short-term top. The developing story out of China should put pressure on prices today.

Daily September High Grade Copper
Daily September High Grade Copper

Technically, the September High Grade Copper chart indicates there is room to the downside. Based on the main range of 2.9855 to 3.2340, the next major downside target is the retracement zone at 3.1098 to 3.0804.

An uptrending Gann angle from the June 25 bottom at 2.9855 is at 3.0955 today. This angle pierces the retracement zone and is also a potential target.

Traders should look for the news from China to dominate the trade today. This is clearly bearish. Volatility could be created by the movement in the U.S. Dollar as investors make adjustments to the pending tapering move by the Fed. 

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.

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