Potential signal:
- I am buying copper above $6.50 with a stop loss placed at $6.20 level, and a target of $6.80 above.
- Copper continues to see a lot of noise, mainly coming from real yields working against non-yielding assets.
- This is a situation where there is demand, but how much remains an open question.
Copper
The copper market plunged initially during the trading session on Tuesday to test a major support level in the form of $6.40. We actually pierced below it but have since recovered.
Top Regulated Brokers
I think ultimately copper is going to be an interesting market to watch because real rates do pay you to hold on to something other than metals. Of course, as copper has no yield, that's an issue. Furthermore, we did get a labor dispute in Chile recently resolved that should help with production. This is part of the negative pressure on pricing at the moment. However, the AI trade is still the primary short-term driver.
Demand long-term should be strong
There is still a massive amount of copper demand out there in the future. Whether or not it's right now remains to be seen, because the artificial intelligence trade itself is starting to struggle. A lot of what you're seeing in the copper market is based on presumed needs for data centers and the like.
If we can recapture the $6.50 level, then the market could go looking to the upside, perhaps to the $6.75 level. If we were to break down below today's low, then I suspect copper would have to test the 200-day EMA. It's an area that a lot of technical traders will be watching.
I have no interest personally in shorting copper. I do think that a move back above $6.50 is a bullish sign, and I think you have the idea of perhaps continuing the overall consolidation with a bit of a bullish twist to it. Because I do believe, longer term, it makes a lot of sense that copper continues to be in massive demand, therefore driving prices higher.
Ready to trade Forex daily analysis and predictions? Here are the best commodity trading platforms to choose from.