COPPER Technical Analysis - COPPER Trading: 2015-12-22

China may cut copper production more than expected

Nine major Chinese copper companies reported they may cut the production next year by more than previously announced 350 thousand tonnes in case copper prices continue edging down. Will this news support the copper quotes?

Besides the promises to cut production, the copper prices increase was also triggered by the news its import to China increased 11% this November from the same month last year amounting to 358.7 thousand tonnes. China consumes about one half of copper produced around the globe. Some Chinese importers have already cut the number of freighted ships for copper transportation for the next year awaiting the sagging demand for the metal.

On the daily chart Copper: D1 is in uptrend having rebounded from the 6-year low. The Parabolic and MACD indicators have formed the buy signals. The Bollinger Bands have contracted severely which may mean lower volatility. RSI has formed the positive divergence. The bullish momentum may develop in case the copper surpasses the last fractal high at 2.14. The most risk-averse traders may wait for the support of the downtrend to be broken through to the upwards at 2.21. These levels may serve the points of entry. The initial risk-limit may be placed below the 6-year low and the last fractal low at 2. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals every 4 hours. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 2 without reaching the order at 2.14 or 2.21, we recommend cancelling the position: the market sustains internal changes which were not taken into account.