The breakout seems to have failed,
- Our calculation model suggests that the recent sell-off in Copper, which was triggered by Copper bulls’ attempt to retest $2.96 per pound area in Mid-February, is set to continue further.
- The recent slowdown in the global economic activities, especially in China, which is the world’s largest consumer of the metal is weighing on price, along with supply increases over the past couple of years.
- China’s manufacturing PMI reported earlier this month, pointed to a contraction in the manufacturing sector. Services PMI also pointed to sharp slowdown at the beginning of 2019.
- This week’s releases showed the Chinese trade balance in February was just $4.12 billion, as exports slumped 20.7 percent from a year ago. It is the worst number in a year.
- The industrial production growth was 5.3 percent y/y in February, the worst figure in 17 years.
However, the announcement that the ongoing Sino-American trade negotiations have hit a hurdle and no deal is now expected even in April. As the news hit the market yesterday, the price of copper declined 1.25 percent. Cooper is currently trading at $2.9 per pound in COMEX.
- Maintain short positions in copper with a target of $2.75 per pound with the stop loss around $2.98 per pound. Expect interim profit booking around $2.83 area.