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A technical look at copper

Commodities 2 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

Summary:  Technical analysis of the weekly copper chart shows downside risks.

Following on from today's Morning Call, in which we discussed the $255 level as significant support in copper, we expand our analysis to the broader technical picture as seen on the weekly chart.

Essentially, the $255 support area is key because it represents the neckline of a shoulder-head-shoulder formation. The head is oddly shaped, and almost resembles a double or triple head, but this is a clear enough shoulder-head-shoulder formation nonetheless.

If we see a close below the neckline, which marginally slopes upward, it could fuel a sell-off that could take copper down to around $210. I would, however, wait for a close below the $255 level illustrated by the blue horizontal line.

That level has been tested a couple of times and seems to be quite strong. 

(Note: horizontal lines are always stronger support/resistance levels than up/downwards sloping trendlines.)
Copper
Source: Saxo Bank

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, or any of our other products work, and whether you can afford to take the high risk of losing your money. The value of your investments can go down as well as up. Losses can exceed deposits on some margin products. Professional clients can lose more than they deposit. All trading carries risk.

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