Copper MACD Measure Signals Drop to 2010 Low: Technical Analysis

Copper futures in New York are poised to reach the lowest price since mid-2010 in the next two months, according to technical analysis from Paul Kavanaugh at FuturePath Trading LLC.

The moving average convergence-divergence graph, or MACD, shows the 26-week and 12-week moving averages traded below a nine-week measure known as the signal line since June 7. The crossover is a bearish sign, Kavanaugh said. Copper futures touched $3.173 a pound yesterday, the lowest since May 3, and may soon test last month’s low of $304.25 and reach $2.85 by the end of August, which would be the lowest since June 10, 2010, according to Kavanaugh.

“The chart is looking bearish on copper for the medium term, and new lows are likely,” Kavanaugh, a futures and options specialist at FuturePath in Chicago, said in a telephone interview. “We would expect to see continued selling pressure.”

Copper has lost 13 percent this year on the Comex amid signs of slowing growth in China and concern that central banks including the Federal Reserve will start to reduce the pace of stimulus.

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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