Metals

Copper Market Washout

Posted 07/20/2018 8:08AM CTPhillip Streible

Copper futures continue to slide lower despite improvements in the fundamentals. Technically the market is oversold according to stochastics and MACD but that confirms the market is in a downtrend. Looking at ADX, which measures the strength of the trend is at 63 and holding steady. Remember that an ADX over 40 indicates that the trend is strong regardless of the market rising or falling. We did a decline in stocks in Shanghai this week, but this could have been merely just a rundown in inventories ahead of slowing demand. President Trump is continuing to put pressure on China by threatening additional tariffs on $500 billion in goods. From a trader’s perspective the market could easily see a slide down to $2.50 if this trade war is dragged out for an extended period so exercise caution on the long side and add to positions on a rising market rather than falling or consider call options with enough time to out last the trade war.

Copper Daily Continuation Chart

Copper Daily Chart

Phillip Streible

Early in his career Phillip began trading his own account as a screen trader focusing on the metals, grains and stock indices. He then became a Series 7 licensed financial consultant with A.G. Edwards. Later, he expanded his trading experience into a Series 3 licensed commodity broker with Investment Analysis Group. Most recently he was a senior market strategist at MF Global before joining RJO Futures in October 2011 as a senior commodities broker. As a senior commodities broker his goal is to show clients how to anticipate, recognize and react to bull and bear market conditions through the use of technical analysis techniques that help them to define risk.