Video

#SaxoStrats
Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Short term
Trade view / 29 May 2015 at 8:47 GMT

Copper once again in correction phase

Chief Investment Officer / ACIES Asset Management
Switzerland
Instrument: HGN5
Price target:
Market price:
Background

The copper markets were in free fall mode last year, coming crashing down from 3.30 mid-year to 2.40 by December. After the bottom in January, we've seen a recovery phase. It hasn't exactly been a smooth ride, but we are moving back up again.

We've seen three strong rally phases since that bottom in January, all of which were followed by a sharp counter reaction on the downside. That's exactly what's happening right now. After this last rally, we pulled back from overbought levels. Now we'll likely see another volatile rally phase, as we did in the recent past. That means now could be a good time to enter new longs for a counter trend trade.

Daily back adjusted copper futures continuation
Copper

Source: CSI Data


Management and risk description

Buy into the ongoing copper weakness, on current levels. Set a fixed stop and target limit in the market for a known risk and potential reward. The current contract to trade is July, HGN5, as that has the highest open interest.

Copper dashboard display
hg dashboard

Source: FollowingTheTrend.com


Parameters

Entry: Buy into current levels, around 2.77 USD.

Stop: Hard stop at 2.656 USD.

Target: Take profits at 2.998 USD.

Time horizon: Around two weeks.

July copper contract
HGN5
 
Source: ThomsonReuters

— Edited by Oliver Morrison

For more on commodities click here 

Non-independent investment research disclaimer applies. Read more
4y
bgold bgold
HG will need that wide stop. Seasonally HG tends to be weak during early weeks of June (MRCI)

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