Copper prices are bearish

Copper prices have been declining for the week. Signals from Chinese officials about additional economic stimulus were offset by concerns about slowing GDP growth and rising interest rates in Western countries.

Industrial metals market participants appreciated the statements of Chinese Premier Li Qiang. According to him, the Chinese authorities will take steps to increase consumer demand and to stimulate the economy.

Amelia Xiao Fu, head of commodities at Bank of China International, is skeptical of Li Qiang's statements. She expects only small and specific economic stimulus. For copper prices, this will not be a reason for a strong rise. High interest rates in Europe and the U.S. will continue to put pressure on industrial metal prices.

Copper stocks, registered on the London Metal Exchange (LME), the Chicago Mercantile Exchange (CME) and the Shanghai Futures Exchange (ShFE), totaled about 165,000 tons at the end of last week. This figure is 45.5 thousand tons lower compared to the beginning of the year and, it is the lowest since 2008.

Over the last three weeks, LME stocks of red metal have dropped from about 100,000 tons to 77,000 tons, despite being increased by almost 30,000 tons. 

Currently, there is a decrease in manufacturing activity in Europe and the United States. The closure of the Ronnskar copper refinery of Swedish producer Boliden has created a 220,000-ton supply deficit on the European market.

Nevertheless, the limited price response indicates that investors are targeting private warehouses that can compensate for the shortage in red metal.

The copper quotes went out of the uptrend on the H1 timeframe. The price fixation on the ascending support indicates the formation of a new trend and a new wave chain.

The price of copper is forming a third descending wave. The break through the top of the first wave at 8360 has already happened. The downward movement may be intensified in the short term.

Signal:

Short-term prospects for copper are to sell. 

The target is at the level of 8160.

Part of the profit should be fixed near the level of 8255.

The stop-loss is at the level of 8430.

Bearish trend has a short-term character, so the volume of trade should not exceed 2% of your balance.