Copper in London may fall to test psychological support at $7,000 a metric ton based on Elliott Wave Theory, according to Cofco Futures Co.
“Assuming the retreat from the high in March is the so-called wave 1, copper is in the downward wave 5 now,” said Beijing-based analyst Liang Lijuan. “The impulse under way will test $7,200 first and may lead to as low as $7,000.”
Elliott Wave Theory, created by Ralph Elliott in 1938, seeks to analyze price trends in a five-stage structure with three steps forward, two steps back. Copper for delivery in three months on the London Metal Exchange fell to $7,331.25 a ton on April 4, the lowest level in eight months.
The metal fell 0.3 percent to $7,584 a ton at 9:32 a.m. Shanghai time, and has lost 9.1 percent after climbing to a four-month high of $8,346 a ton on Feb. 4.
“Finishing this wave, copper is likely to witness a rebound, the scale of which will depend on the bottom found in wave 5,” Liang added.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, index or currency.