Copper MACD, RSI Measures Signal 9% Drop: Technical Analysis

Copper on the London Metal Exchange will probably fall as much as 9 percent in the next two months, according to technical analysis from TransGraph Consulting Pvt.

Metal for delivery in three months may decline to as low as $6,200 a metric ton, analyst Saumendra Satapathy said in an e-mail today. Copper, which entered a bear market in April, has slumped 14 percent to $6,827.75 a ton this year.

“Prices are undergoing a downside corrective phase since the year 2011 high of $10,190,” Satapathy said. The momentum in the 14-week relative strength index, or RSI, and the weekly moving average convergence-divergence, or MACD, has been weak, hovering well below the equilibrium, he said.

The MACD indicator is a gauge of momentum derived by subtracting a 26-day exponential moving average from the 12-day average. A second measure, called the signal line, uses the nine-day moving average of the MACD indicator. The RSI measures the velocity of price changes to identify overbought or oversold conditions and turning points.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

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