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Copper: Is it the arrival of a king?

Copper: Is it the arrival of a king?


Copper August 

CMP: Rs 405.65 (As on 02nd Aug, 2017)

Buy: > Rs 415

Targets: Rs 448-479

Stop Loss: < Rs 392

Copper, once touted as the ‘king of base metals’ saw a major downturn in the year 2014 and 2015. The decline actually started during the last quarter of 2013 after reaching an all time high of Rs 512 in August, the same year. A glut of inventory kept copper under consistent pressure for next two years, making prices tumble more than forty two percent during the above time frame. It was in 2016 when the chief metal consolidated strongly and gave first signs of a bullish reversal in November when it rallied more than twenty one percent. This was a major turning point which has pushed Copper to the present scenario when it is very near to a big breakout to reclaim its lost glory.

On monthly chart, we can see that the three year long correction plus consolidation phase is captured in a channel. In November 2016, a strong breakout of this channel pattern turned heads and rekindled the interest of traders and investors in copper. However, after the huge breakout, prices went back into the consolidation mode for a brief period, shaping up pattern further into insider pattern. The rally seen in last two months has repositioned copper near the top of the insider candlestick pattern and it seems that the right time has arrived for a big breakout. The expected breakout has the potential to take prices near all time high. Momentum indicators are also supporting the continuation of the bull rally with their toned position and free space for further rise.

We recommended buying in Copper August above Rs 415 for targets in the range of Rs 448-479. Maintain stop loss below Rs 392.

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