Copper Slides After Rejecting Key Tech Levels, Looking Past China’s Monetary Stimulus

  • Copper
    (${instrument.percentChange}%)

Copper Analysis

Economic activity in China has been revitalized, after the government shifted away from the detrimental zero-Covid policy. However, discouraging incoming data over the last couple of months, have cast doubt over the recovery of the world's second largest economy and one of the top consumers of Copper.

As a result, the commodity dropped further in May, erasing the gains from the strong 2023 start. The poor economic data though, created scope for stimulus by authorities and helped Copper into a three-week rebound.

These expectations materialized in June, as the Chinese central bank started by lowering a key short-term rate by 10 basis points last week [1], in order to provide liquidity and facilitate the economic growth. More such action followed in quick succession, since the PBoC cut the medium-term lending facility (MLF) [2], as well as the one-year and five-year loan prime rates (LPR) [3].

The central bank's activity supported Copper, helping it extend the advance above the 200Days EMA and the daily IChimokou Cloud. It rejected this key region however and slides towards a losing week, as broader sentiment soured after the surprisingly aggressive rate hike by the Bank of England. [4]

It now tests the critical 38.2% Fibonacci of the last leg up and the EMA200, which makes it vulnerable to 3.708-6, but the 2023 lows (3.543) looks distant at this stage. If however Copper manages to contain the correction at the current levels, it does not lose the ability to push for higher highs towards the descending trendline from this year's highs (4.060-5). Further advance past this resistance looks like a toll order though, in the current environment.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 23 Jun 2023 http://www.pbc.gov.cn/en/3688110/3688181/4953385/index.html

2

Retrieved 23 Jun 2023 http://www.pbc.gov.cn/en/3688110/3688181/4958298/index.html

3

Retrieved 23 Jun 2023 http://www.pbc.gov.cn/en/3688229/3688335/3883798/4966512/index.html

4

Retrieved 23 Jun 2024 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/june-2023

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.