Industrial metals are as nervous as the FX and the Stock Markets, weighing a high probability of a trade war between the two largest economies in the world and not only. The downgrading of copper in the last days is more of a technical significance than a fundamental one. In the long run, both the trend and the foundation remain for the rise of the metal, but if we see a break in the main upward trend (outlined by the yellow line), this could be a very significant signal for the global economy. Continued retention of copper under the mainstream trend will also lead to a significant increase in gold gaps, as a fall in copper leads to uncertainty in the markets, and that will surely raise gold.
What we can do right now is to take long positions because the price of copper is close to the main diagonal and gives us a very good positioning capability with a short stop. In support of the long idea is also the absorbing bar of 3 weeks ago and the current price adjustment. SL from current levels will be at levels below the base diagonal.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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