Copper (HG1!) - Aiming for 618 Fib (18% move from January bottom
Fundamentals:
No major supply disruptions occurred in 2018 and most labour negotiations have been agreed. However, overall growth has been negatively affected by lower output at some mines in Canada and operational problems in China, Peru and the United States. As a consequence the ICSG growth forecast for mine production was revised down to 2% compared with the previous forecast of 2.9% made in April 2018. knowing this growth in 2019 world mine production, adjusted for disruptions, is predicted to be around 1.2% and is expected to be impacted by a sharp decline in Indonesian output.
Copper also tends to more sensitive to inflation and moves correlated. Inflation base case is mild inflation which should support copper prices.
Technicals:
Copper had a double top formation in 2018. First peak hitting in January 2018 and second in June. From there the commodity dropped nearly 25% from a high of $3.30 to a bottom in Aug 2018 at $2.50. The metal climbed to its 38.2% Fib extension before trading down for a double bottom technical bounce in Jan 19'.
Indicators:
Stochastic: Overbought
RSI: 69. Near overbought
ADX: 23. Bull trend confirmation intact.
Copper Bulls have the technicals, momentum and industry production support for a continued bull run in all of 2019. We expect prices to test in 2019 the 618 Fib, which would be a 18% bounce from the January bottom this year at a target price of $3.01.
No major supply disruptions occurred in 2018 and most labour negotiations have been agreed. However, overall growth has been negatively affected by lower output at some mines in Canada and operational problems in China, Peru and the United States. As a consequence the ICSG growth forecast for mine production was revised down to 2% compared with the previous forecast of 2.9% made in April 2018. knowing this growth in 2019 world mine production, adjusted for disruptions, is predicted to be around 1.2% and is expected to be impacted by a sharp decline in Indonesian output.
Copper also tends to more sensitive to inflation and moves correlated. Inflation base case is mild inflation which should support copper prices.
Technicals:
Copper had a double top formation in 2018. First peak hitting in January 2018 and second in June. From there the commodity dropped nearly 25% from a high of $3.30 to a bottom in Aug 2018 at $2.50. The metal climbed to its 38.2% Fib extension before trading down for a double bottom technical bounce in Jan 19'.
Indicators:
Stochastic: Overbought
RSI: 69. Near overbought
ADX: 23. Bull trend confirmation intact.
Copper Bulls have the technicals, momentum and industry production support for a continued bull run in all of 2019. We expect prices to test in 2019 the 618 Fib, which would be a 18% bounce from the January bottom this year at a target price of $3.01.