Dr Copper: Economic Health Improving Amid US-China Trade Optimism

01/30/20 04:05:52 PM

by Fawad Razaqzada

Risk-sensitive copper has rallied along with stocks over the past couple of weeks amid receding Middle East tensions and on growing optimism that the US and China will soon end their damaging trade war.

Security: N/A
Position: N/A

Optimism over a US-China trade deal has seen investors price out the risks of a global slowdown, boosting the appeal of the commodity. A trade agreement should also help underpin the yuan, which in turn should mean more buying power for Chinese producers and consumers. Meanwhile, economic data in the US has remained resilient and we have seen some mild improvement in the Eurozone, too.

As a result, copper has been rising, underlying expectations that the global economy has averted a slowdown — something which looked imminent in early parts of last year.

So, the fundamental backdrop looks positive for copper at the start of 2020, at least from a physical demand point of view. But what about the technicals?

Well, recent price action on copper has been bullish, suggesting more gains are likely in the weeks ahead, unless something fundamentally changes.

Figure 1. Copper Weekly Chart.

Graphic provided by: TradingView.

Indeed, the base metal breakout from a falling wedge pattern at the end of 2019 is a bullish development. A couple of weeks ago, it came back to retest the broken resistance trend of the wedge, and this has held as support. In a further bullish development, copper has now broken above last week's high and resistance at 2.8200. If the trend remains intact, the bulls' next target would be the 2019 peak at 2.9900. At the time of writing, it was testing old resistance around $2.8500.

Fawad Razaqzada

Fawad Razaqzada is an experienced analyst and economist having been involved in the financial markets since 2010 working for leading global FX and CFD brokerages. Having graduated with a degree in economics and leveraging years of financial market experience, Fawad provides retail and professional traders worldwide with succinct fundamental & technical analysis. In addition, he also offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders. He has also been trading on his personal account for many years. Follow Fawad on twitter @Trader_F_R or visit his website at TradingCandles.com.

Title:	Financial Market Analyst
Company:	TradingCandles.com
	London,
Website:	tradingcandles.com
E-mail address:	fawad.razaqzada@hotmail.co.uk
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Dr Copper: Economic Health Improving Amid US-China Trade Optimism

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