Chart of the day: Bull run in Shanghai copper futures unlikely to sustain
It is early days yet but Shanghai copper futures prices have caught many off guard, holding support at about 33,750 yuan per tonne during the first quarter of this year and inside the previous quarter’s range. A short squeeze kicked off on Friday with the break above horizontal resistance at 36,650. Follow-through on Monday, no doubt caused by short-covering, saw the market retrace a Fibonacci 61.8 per cent of the most recent decline, surging with a shooting-star candle at the 200-day moving average. Coupled with an extreme overbought situation, there is a good chance that bullish momentum might retreat as it did in mid-December. Expect a slow drift back down to the 50-day moving average at 35,800, followed by a lot more work either side of 36,650.
Nicole Elliott is a technical analyst