The complicated picture of global demand has made it particularly difficult to gauge future demand for many commodities. Over the course of the last decade the largest source of demand for copper has come from China as the country has benefited from an almost constant 10% growth. The cooling economy has caused many to question the strength of the Asian markets and the subsequent issues that many of the emerging markets have suffered as a consequence.
Today marks the start of a weeks’ worth of Chinese celebrations for the year of the horse. With China having a week-long Bank holiday, the commodities markets will be running on autopilot.
The prolonged sell-off that we have seen has helped push the RSI down into oversold territory. This sort of weakness was last seen in mid-November.
On a daily rolling basis Chinese demand can account for as much as 55% of the daily trading in Copper. As such, it would be difficult to hold too much confidence in traders over the coming week.