By IFCMarkets

Copper bearish trend continues

Let us consider the continuous copper CFD or COPPER on daily timeframe. Copper is under pressure as world economic growth is slowing down. China is the biggest consumer of copper, accounting for about half of metal’s world consumption. In 2014, the GDP grew by 7.4%, slowing from 7.7% in the previous year. China’s economy is transitioning to a slower growth path with a GDP target growth rate of 7%. The official report of China Federation of Logistics and Purchasing released on August 1 showed the Manufacturing PMI for July fell to a five-month low level of 50.0, the borderline level with readings above it indicating expansion and below – industry contraction. On August 3 Markit’s Caixin Manufacturing PMI, based on surveyed purchasing managers in the manufacturing industry, came in below 50 for the fifth month in a row. This is a bearish development, indicating no support for falling copper prices.

COPPER has been falling since the end of May. The Parabolic indicator gives a sell signal. The Donchian channel is tilted downward, indicating downtrend. The bars of RSI-Bars oscillator are falling though the oscillator is in oversold zone, which doesn’t mean the price cannot fall. We believe the downtrend will continue after the price closes below the last fractal low and lower Donchian boundary at 2.3277. A pending order to sell can be placed below that level. The stop loss can be placed above the last fractal high at 2.4544. After pending order placing, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not considered.

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