Copper appears to be weak after a breakdown below the main support levels

16 March 2023 153
Copper appears to be weak after a breakdown below the main support levels

The price of copper declined amid new economic problems that came in the form of a liquidity shortage faced by Swiss bank Credit Suisse Group AG.

According to Dan Smith, head of research at Amalgamated Metal Trading, the price of copper is now more vulnerable to the current banking problems than the prices of other base metals. This is caused by a relatively strong start the copper prices have had this year, hitting a seven-month high of $9,538 a ton in January.


The resumption of copper mining could have a negative impact on the price.

As reported by Franco-Nevada, First Quantum Minerals has returned to operations at the Cobre Panama mine.

First Quantum suspended ore processing operations at the mine on February 23 after the Panamanian government ordered a ban on permitting copper loading at the port.

The mine accounts for about 1.5% of the world's copper production.


In Mongolia, the underground part of the Oyu Tolgoi copper mine has been opened. Once operational, it will become the fourth largest mine in the world.

The head of Rio Tinto's copper division considers the Oyu Tolgoi copper mine a promising project.

Despite the gradual reopening of major Peruvian mines, physical reserves of the red metal are at their lowest level in many years due to relatively high demand from China. This is an opportunity for the copper price to rise despite some new mines being opened.


Copper prices have fallen below important technical levels. The medium-term uptrend has been finally broken in recent trading sessions. The price consolidation, which had been lasting since the end of January, was broken down on yesterday's news. The same applies for the 0.382 Fibonacci level of the entire growth wave.

The nearest downside target for the red metal is the strong 0.5 Fibonacci retracement level. Thus, the price of copper may go down to the level of $8,400. A stop-loss will be placed when the price goes back above the Fibonacci level and tests the consolidation from the bottom upwards. This corresponds to a price of $8,680.


A decrease in the price of copper:

Take profit – $8,400

Stop-loss – $8,680

 

This content is for informational purposes only and is not intended to be investing advice.

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