By IFCMarkets
Copper has been falling since 2015, hitting a seven year low in mid-January. Economic data indicate manufacturing activity rose in China last month, together with growth in exports and copper imports. Will the copper continue falling?
China’s trade data showed copper imports hit a record high in March, posting a 30.1% rise in the first quarter from last year. China’s economy is transitioning to a slower growth path with a GDP target growth rate of 6.5% to 7% for this year following a 6.9% expansion in 2015, the weakest in a quarter century. This is partially explained by government plans to transition away from a manufacturing driven intensive model to an economy reliant on consumption growth. However trade data on Wednesday indicated exports rose for the first time in nine months, increasing 11.5% in March, compared with a 25.4% drop in February. At the same time a 7.6% decline in imports was lower than the 13.8% fall in the previous month. China’s first quarter GDP grew at 6.7% rate, with fixed asset investments accelerating to 10.7% year-to-date (YTD) in March from 10.2% in the previous year. Industrial production rose 5.8% YTD from 5.4%, and retail sales grew 10.3% YTD compared with 10.2% a year earlier. Better than expected indicators suggest that China is not headed for a hard landing as investors worried recently. The International Monetary Fund on Tuesday raised China’s GDP growth target for 2016 to 6.5% versus 6.3% previously. Improved economic outlook for the worlds biggest copper consumer is a bullish factor for copper and industrial metals in general.
COPPER:D1 had been falling in the daily timeframe since the beginning of last year, recording a 23.85% loss in 2015. It started rising after hitting a seven year low in mid-January, breaching above the resistance line in the beginning of February. It is correcting upward currently after a pullback which started on March 18. The Parabolic indicator has formed a buy signal. The Donchian channel is flat. The MACD indicator is below the signal line and zero level but the gap is closing, which is a bullish signal. The RSI oscillator has reached the middle level but is edging down, which is a bearish signal. We believe the bullish momentum will continue after the price closes above the upper Donchian boundary and last fractal at 2.323. A pending order to buy can be placed above that level. The stop loss can be placed below the last fractal low confirmed also by Parabolic signal and lower Donchian boundary at 2.0724. After pending order placing, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (2.0724) without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
| Position | Buy |
| Buy stop | above 2.323 |
| Stop loss | below 2.0724 |
Market Analysis provided by IFCMarkets