Having come up against its 200-day moving average at the end of May, high grade copper has come tumbling down and is now down almost 5% from these levels. There is currently an investigation going on in China over the illegal warehousing of the metal and the possible outcome of this is keeping prices suppressed.
The last 24 hours have seen the European Central Bank announce a number of measures that they will be embarking on in an effort to inject some stimulus into the markets. Equity traders had been hopeful that stimulus was going to come from both eurozone and China and it will be interesting to see how the ECB’s actions guide the latter.
Monday next week will bring the latest Chinese inflation figures; Friday industrial production figures. Metal traders could well be hoping for some poor numbers as that might act as the catalyst for Chinese action.
As the metal is now sitting below the 50-, 100- and 200-day moving averages it looks possible that a dip below the 300 cents level could materialise before the relative strength index indicated that it was oversold. Either a short-term short or waiting for more attractive levels to buy would be the most attractive proposition.