FxWirePro: Sell copper targeting $1.5 area

Since late last year, the price of copper has been moving in a range, flirting with both supports and resistance. We have been calling for a further downside move in copper for quite some time now and we believe that break down point in copper is closer than ever. Despite the weakness in the price of copper the supply hasn’t declined by much, instead, producers focused on cutting cost.

The biggest threat to copper is still China and the debt profile there isn’t looking great at all. It is very difficult to predict when the crisis in China would become a full blown one, but data do point to a moving in that direction. Recently the Bank of International Settlements (BIS) has warned against the debt to GDP gap, which is hovering at 30.1 percent, three times the level considered critical.

Breaking the resistances around $2.2, $2.3 and finally $2.4 area would be very difficult for the copper bulls, instead, we expect a drift towards the base of the support around $1.9 per pound and a break below to reach around $1.5 area.