Copper Forecast Today 16 January Continues To Follow Range

(MENAFN- Daily Forex)

• In my analysis of the commodity markets, I am drawn to the copper chart, mainly because we have been in the area of“fair value” for the last seven or eight months.
• Keep in mind that, in a sense, copper is a proxy for China, as it is a major consumer of copper. Furthermore, you can look at Australia, which is a major producer of copper. What do these 2 things have in common? Weakness.

Overnight, the People's Bank of China decided to intervene in several Chinese markets. While that does lift the market short term, it shows just how dire the situation is in China. In fact, for a bit of entertainment, watch the 30-year Chinese bond yield. It is about to fall through the floor, and it looks like an absolute disaster. This suggests that people are worried about the Chinese economy, and it is very possible that the Chinese will have to deal with the fact that you cannot build an economy by billing empty apartment buildings. This has been a driver of copper for some time.

However, some people look at copper through the prism of artificial intelligence, and while that does make a certain amount of sense, that's not the same thing as building millions of buildings around the world, and of course the massive“ghost cities” that we see in the mainland Chinese region.

Technical Analysis

While we are technically in the middle of a larger trading range between the US$4.00 level and the US$4.70 level, the reality is that it does look a little bit exhausting at the moment, and there is a significant amount of resistance near the US$4.40 level. In other words, I think it's very likely that we will see a bit of weakness here, perhaps dropping down to the 50 Day EMA near the US$4.20 region. Underneath, it then opens up a move to test the bottom of the overall range. The alternate scenario is that somehow, we break above the US$4.50 level, which allows copper to go looking to the US$4.70 level.

If you don't trade copper, that's fine. However, you need to look at it as a way to measure global growth, as it is used in the construction of quite a few things, as well as manufacturing. In other words, it's a gauge for global trade.

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