Copper price slipped below $2.40/lb (1lb=453.59265gm), a key support level, and was trading at $2.3260. With the $2.4 level becoming the key resistance level, the copper price needs to break this level to gain upward movement.
Otherwise, the bearish phase for copper is most likely in the short term.
Jesse Colombo, contributor at Forbes.com offers three important factors to determine copper price movements: the US dollar, Chinese financial markets, and China economy in general.
For the past one month, copper has been reeling under bear pressure following the impact of China economy slowdown, stock market crash and so on. Copper has been on the downward movement for over one year. It broke a key support level of $3/lb in late November 2014 and continued to fall till February this year.
Later, copper price picked up to near $2.75 level in May and couldn't sustain at this level also. It fell further broke another support level of $2.4/lb, which was formed early January, in early August. This was on a very much expected line as it was part of commodities bubble and exposed to China's economic bubble, analyze some analysts.
Copper price broke both the support levels of $3 and $2.4 and as long as it's under these points, the downtrend for the metal is more likely.
According to finviz.com, the monthly charts indicate that the 2009 low was at $1.25/lb, which is more likely the support level for copper. As long as the copper price is hovering under $2.4, the chances very bright that $1.25 is also a possibility.
The US dollar trades inversely to copper. This means, if copper price picks up then US dollar weakens and vice versa.
The US dollar index is at 95.85 and next resistance levels are 98 and 100 respectively while 93 is support level. If the dollar index breaks above 100 resistance level, it'll result in bullish phase for the US currency. This means copper price will again continue under the bearish note.
Adding to this, If China stock markets continue the bearish phase, then copper is most likely to be under pressure.
One has to keep an eye on the movements in the US dollar, China financial markets and its economy. As long as China's economy reels under pressure, it's more likely that copper will also be hammered down further. If the US dollar becomes weaker, then the copper price is more likely to be on the upward journey.
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