The copper bull market has been one of the main casualties this year after the onset of the trade war between the United States and China, and there is no sign that the conflict will be resolved anytime soon.
The mixed performance by the base metals comes amid heightened risk-off sentiment in the market with the public consultation in respect of the United States’ plans to implement tariffs on a further $200 billion worth of Chinese goods coming to an end on Thursday.
The Chinese Ministry of Commerce said on Thursday that it would take retaliatory action should the US proceed with the implementation of fresh tariffs against China.
For the week, LME copper is down 2 percent while the market in Shanghai has given up 1.6 percent, but in MCX Prices are trading on a positive note and is up 1.5 percent thanks to rupee weakening towards Rs72/USD.
Weakness in Dollar Index could provide support to copper prices in the near-term. However, it looks like that market would closely watch the trade war developments of the US and China and any negative news on that front would dent a recovery in copper prices.
MCX Copper Technical Analysis:
From the above chart, we can see copper prices had a vertical fall from around 490 in June to around 403 in August and since then price is consolidating between 400 and 430 zones.
Recently prices have moved out of a channel seen as (T1 and T2) in the above chart and prices are sustaining above that which is a positive sign.
Prices are above the 20-day SMA (Pink Line) and are trying to push above the 50 days SMA (Orange Line) once done we could see a move up towards 450/460 zones in the near term.
Prices on Friday made a high of around 430 and are now trading around 421. If prices again cross above 430 that would be the trigger for a positive up move.
We can also see prices after moving of the channel are well supported by an upward sloping trend line (T3) so as long as prices sustain above these trend line short-term trend remains on the upside.
RSI in August made a positive divergence where prices made a new low but RSI failed to make a new low as seen in the above chart, which indicates prices could head UP in near term.
Thus from the above analysis, we conclude that if prices sustain above 430 we could expect a move towards 450/460 zones in short to medium term.
Disclaimer: The author is AVP Commodity Research, SSJ Finance & Securities Pvt Ltd. The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.