Copper traders seem unable to make up their minds, over next move in the red metal. For fourth month now, copper has been trading in a tight range, caught between the fear of China slowdown and supply rebalance in wake of lower prices.
- Bullish analysts point out that companies such as Glencore have decided to cut back production and further investment in the mining sector has hit multi-year low. It has increased the possibility of future supply shock and slowly making the way for next bullish cycle.
- Bears are however pointing that actual slowdown in China has not yet played out completely. Recent easing by European Central Bank this year has helped ease the pain and led to the gradual drop of riskier assets. Even with central bank easing and Yuan's inclusion in SDR, hard landing in China is likely to happen and China might be heading towards a banking crisis.
Technical picture suggests, there are lot of uncertainty regarding next major move. Copper has been posting doji like candles in monthly chart suggesting lack of clarity and it seems like only a fundamental shift such as rate hike by US Federal Reserve or further weakness (sharp) in China might tilt the balance.
Copper is currently trading at $2.32/pound.
