Copper May Extend Rally, Reach Record $11,000 in 2011: Technical Analysis
By Sungwoo Park - Dec 29, 2010
Copper, which has surged 27 percent this year, may extend a rally to reach a record $11,000 a metric ton in the first half of next year, according to a technical analyst with Samsung Securities Co.
The metal is likely to remain on an uptrend in a pattern of higher peaks and higher valleys, and may touch $11,000, based on Fibonacci projections, said Seoul-based You Seung Min at the brokerage unit of South Korea’s largest family run conglomerate. Prices steadied above the 50-day moving average and copper’s weekly moving average converge/diverge, or MACD, remained above the signal line since August, showing the ascending trend is “stable,” he said.
“Copper’s uptrend grew stronger since summer and the rally doesn’t look overdone,” said You, who correctly forecast in August that the metal would rise to more than the closing high of $7,990 in the second half. “The trend looks very stable and will continue through next year.”
Copper for three-month delivery surged to an all-time high $9,447 yesterday and is poised for a second annual gain as demand from emerging markets reduced inventories. The contract traded little changed at $9,394.75 a ton by 10:04 a.m. in Singapore. Copper use will outpace supply by 825,000 tons next year, according to Barclays Capital. The metal may rise to $10,475 next year, according to traders and investors surveyed by Bloomberg News.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices tend to drop or climb by certain percentages after reaching a high or low.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
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