Copper set to gain further ground in short term as key resistance cleared – calls included

Copper has reached our target area of $2.24/pound in last week of August and is now looking to move higher over short covering.

Fundamentally speaking, we remain bearish in Copper and expect further slide in the red metal, however in the short term going long in copper is looking attractive as key resistance got cleared around $2.43/ pound area.

Copper might have formed a key bottom around $2.2/pound area.

Traders across the world has been holding record short positions in Copper and Glencore's move to shut down loss making mines seem to be leading to some heavy short covering.

Glencore has taken decision to close down its African mines for 18 months, which is going to reduce supply imbalance by 400,000 tons in 2016.

Though Glencore's move is unlikely to reverse Copper's longer term trend it sure can lead to much greater rally.

Trade idea -

• Buy Copper at current price ($2.44/pound) with stop around $2.24/pound area and $2.75/pound area as target.
• Since the trade is against longer term fundamental, conservative traders might choose to use $2.29/pound area as stop loss.
• Interim targets are $2.55 /pound and $2.65/pound, 1/3^rd profit bookings suggested at these levels.