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Fundamentals

During Tuesday's (August 15th) Asian session, copper oscillated upward, and it is currently trading near 8320. Recently, copper prices eased the trend after falling by 600 points from highs. Macroscopically, the negative factors weakened, the dollar is oscillating at highs, and a plunge in copper prices will start when crisis factors appear. Currently, the positive factors are always there but covered up shortly, that is, the inventory support and the potential recovery of the economy. With the approaching of the peak season (September and October), the market would hold an optimistic attitude toward future copper prices, and copper demand is expected to grow. Instead, the copper inventories are at a low level, which may provide upward momentum for copper prices. Besides, the constraints of China's economy are fading, and the 4th season is China's traditional peak season. In the morning, China's central bank surprisingly cut interest rates sharply, which is a stimulus for the market to boost the copper demand, and thus the copper prices will grow as well. Since the lower space of copper prices is limited, it is reasonable for investors to go long at lows.

Inventory: As of August 14th (Monday), SMM copper stocks for China's mainstream areas declined 9,900 tons to 82,600 tons compared with last Friday, 12,300 tons more than the same period last year (73,300 tons).

Technical Analysis

Daily chart: Copper failed to rebound yesterday. Under a bearish trend, copper once plummeted to 8235. Furthermore, after a round of decline, despite copper being under a bearish pattern, the space below is small, and thus investors should consider the possibility of an oversold rebound and build a bottom. Even if investors try to go short, they must go short only in the near term and trade quickly. From a huger cycle, copper is under an ascending cycle, while the current retracement is sufficient. Now, investors should follow the oscillations near the 5-day SMA (8330). If copper stands above the 10-day SMA (8420), the short-term trend could be reversed, which will support the bulls.

Trading recommendations: Investors should not consider short orders, but go long with small positions after copper gets stable. If copper stands above 8300, investors shall trade long orders, and set the stop-loss at 8200. The first and second targets to take profits would be 8530 and 8800 respectively.  

Trading Recommendations

Trading direction: Long

Entry price: 8250

Target price: 8550

Stop loss: 8200

Support: 8280/8150

Resistance: 8550/8860