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Copper Futures Analysis

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Copper Futures

 

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer. 

 

Free in-depth analysis of the Copper futures market written by a professional Copper trader.

 

 

May 03, 2013

Metal Futures Broker, Van Commodities, Inc.

The Copper future contract (HGN13) lost roughly twenty percent of its value from February 4 to May 1, on an intraday basis. The move down was a consequence of slowing economic growth in China, concerns about the global economy in general, and increasing London Metal Exchange (LME) inventories.

 

Since hitting an intraday low of 3.0425 May 1, HGN13 has rallied nine percent over the past three days. Roughly six and a half percent of HGN13’s surge occurred today on the back of an improved employment situation in the US, reflected by the Non farm payrolls data released this morning by the Labor Department.

 

HGN13 had become extremely oversold based on several momentum indicators on short and intermediate term time frames on the trade down from February to May. Over the past three trading days HGN13 scored a reversal week and the chance for further upside price action appears to be a reasonable possibility. Although over the longer term the trend may still be down, copper may continue to rally on hopes of better economic news out of the US and the need to work off the oversold condition.

 

Over the near term HGN13 may find initial support at 3.2100-3.2480, with further support at 3.1500-3.1800. Initial resistance may come in at 3.3400-3.4000, with further resistance at 3.4300-3.5200.

March 24, 2013

Copper Futures Broker, Van Commodities, Inc.

Three weeks ago the copper future (HGK13) broke through significant trend line support and continued to trade down close to multi month lows last week. It is said by many macro investors that copper has a PHD in economics. If there is any truth to the concept then the price action of HGK13, over the past several weeks, may be a warning to global investors with a bullish, risk on stance.

 

Although the US housing market and economy seem to be firming, the action of HGK13 has to concern investors about the outlook for global economic growth. Traders and investors will be looking for the outcome on bank financing negotiations between Cyprus and Euro Zone Finance Ministers, Sunday evening, and the implications for the Euro Zone and global markets.

 

HGK13 became oversold based on several short and intermediate term momentum indicators at the start of last week. Over the near term initial resistance may come in at 3.5400-3.5600, and stronger resistance at 3.5800-3.3.6100. HGK13 may find support at 3.3320-3.3600 over the intermediate term.

February 13, 2013

Copper Futures Trader, Van Commodities, Inc.

The copper future (HGH13) continues to trade in its multi year one dollar trading range of 3.00-4.00. The triangle that has been formed with lower highs and higher lows, over the past sixteen months, has tightened the range to about fifty-five cents at 3.30-3.85.

 

The symmetrical triangle formed due to uncertainty over global economic growth and copper demand will possibly be resolved sometime this year, with either a breakout or breakdown. The direction of the move will depend on global growth with the economic data from China and the US being major variables in the direction for the move out of the consolidation pattern.

 

HGH13’s roughly twelve percent rally from November 09, 2012 to its February 04, 2013 high resulted in an overbought condition on both short and intermediate term momentum studies. HGH13 is still registering an overbought condition based on several intermediate term momentum indicators, but short term indicators are slowly moving towards a more neutral stance. Until traders have a more conclusive view of future global economic growth and demand for copper HGH13 will probably continue range trading.

 

Over the near term initial resistance for HGH13 may come in at 3.77-3.80 with stronger resistance at 3.82-3.85. Initial support may come in at 3.65-3.69 with stronger support at 3.57-3.60.

Commodities Trader, October 31, 2012

Macro economic uncertainty has been manifest in the price action of copper futures basis the December contract (HGZ12), traded on COMEX. Over the last several months US economic data has been somewhat mixed: with housing bouncing off the bottom; the auto sector ticking along nicely; but the manufacturing sector, as a whole, showing an economy with a decelerating growth rate. Asian economic statistics have also been somewhat mixed over the last several weeks with China slowing, but potentially stabilizing and the Euro zone’s data continuing to show a troubled economic environment.

Copper traders will be watching for several statistics at week’s end which will give a picture of the economic environment in a number of regions around the globe. Thursday, November 01, 2012 the US ISM manufacturing and Unemployment data will be released as well as Markit PMI’s (Purchasing Managers Index) for the US, UK and China. On Friday November 02, 2012 the Euro zone PMI’s will be released by Markit and the US Bureau of Labor Statistics will make public Nonfarm Payrolls and the Unemployment statistics for September. Better than expected data from the US and China would probably lead to some upside in HGZ12, but overall it would seem that global growth may continue at relatively low rates in the foreseeable future.

HGZ12 is trading within a well defined $1.00 range $3.00-$4.00. The pattern on longer term charts is up for interpretation, but the odds would appear that when the configuration finally resolves itself the bears will have control of the market, unless economic growth starts to pick up. HGZ12 will have a hard time getting above 3.81 if the bear case is correct and a break below 3.35 would portend negative ideas for the global economy. On a short term basis HGZ12 is oversold and a trading bounce would not surprise. Initial resistance comes in 3.62-3.66 and then 3.70. Support comes in at 3.43 and then 3.35.

Copper Futures Broker, May 1, 2012

COMEX copper futures, basis the July futures contract (HGN12), closed at 3.8415 its highest level since April 2, 2012. The driving force for HGN12 upside move today was the stronger U.S. ISM manufacturing data. The overall manufacturing index was stronger than expected, coming in at 54.8 higher than the anticipated 53 level. Several sub indices showed unexpected strength including; new orders, production, employment and export orders. Although China's PMI came in at 53.3, slightly weaker than expected, the index was still above the 50 level showing continued growth for the Chinese manufacturing sector.

HGN12 should have significant resistance around the $4.00 area and good support around $3.60. Initial resistance and support come in around 3.90 and 3.75 respectively. Market participants will be watching economic data in an attempt to gauge the future trajectory for global growth. For the U.S. market participants will be looking to Wednesday's ADP employment data, Thursday's ISM Non Manufacturing data along with unemployment claims and Friday's all important Non Farm Payrolls and Unemployment statistics. Economic data showing unexpectedly stronger or weaker economic growth could send HGN12 above or below the aforementioned resistance and support levels.

March 12, 2012

Metals Trader, Van Commodities, Inc.

Copper, being a major industrial metal, is viewed by many market participants as an economic indicator for industrial demand and the health of the global economic environment. The market is therefore closely watching each piece of global manufacturing and economic data as it hits trading screens to support a directional trade in the copper market.

The data from China is scrutinized closely as the country is the world's largest consumer of copper, taking down roughly 40 percent of world wide supply. Last week China announced that it was reducing its GDP growth target to an eight year low of 7.5 percent this year. China’s planned adjustment in economic growth will be directed towards more growth in consumer demand and a reduction in the growth rate for investment in large infrastructure projects. This fact along with the sub par growth in much of the industrial world has many traders looking closely at the supply and demand information on copper.

After COMEX copper futures hit an all time contract high in the middle of February 2011 of $4.65 per pound, the industrial metal subsequently traded down to $3.00 before recovering a little over 60 percent of its down move February 2012, when the metal traded around $4.00 per pound. Since the beginning of February 2012 copper futures on COMEX have been trading in a tightening 30 cent range. Significant technical resistance comes in between $3.96 - $4.00, basis the May futures contract (HGK12) and support comes in between 3.75 – 3.72. The pattern displayed by the chart for HGK12 reveals a battle unfolding between bullish and bearish forces. The bull camp is of the view that economic strength will result in continued demand for copper, taking down supply with higher prices, whereas the bear camp sees further weakness in the global economy resulting in reduced demand and lower prices.

The breakout from the above described triangle pattern should result in a tradable move, with many participants placing their bets using options whilst the market trades the range based on their favored directional bias.

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicition. This material is not a research report preparfed by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

 
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