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Copper: Why this commodity has further to fall

by , 27 November 2015

Commodity prices are at multiyear lows. It's hard to find a commodity which is thriving in the current climate.

One commodity to stay clear of at the moment is copper. If the charts are anything to go by, this metal still has a long way to fall.

Let's take a closer look at what could lie in store for the metal…


Don’t underestimate how far copper could fall

 
The price of copper is a fraction of what is was a few years ago. 
 
Jump back to 2011 and the copper price was trading at $4.50 per pound. Fast forward to the present day and it’s a mere $2 a point.
 
That’s a drop well in excess of 50%.
 
Yet just because the price of copper is down so much doesn’t mean it won’t fall further. In fact, copper looks set to fall a lot more.
 
Last week, the copper price broke through an important support level, Jeff Clark in The Crux explains. Of course there is a chance the price will bounce higher, but the potential reward isn’t worth the risk.
 

The price of copper looks set to drop significantly

 
The long-term trend for the copper price is down. And it looks like copper will be much cheaper in the months ahead than it is now.
 
Have a look at the chart below…

 
Chart of copper price
 

You can see how much the price of copper has fallen. Importantly, the next significant support level is at $1.40. That’s around 30% less than the current price.
 
Even if the price bounces in the short-term, chances are it will fall again.
 
With copper looking as it is, it’s not a wise choice to put on a trade that its price is going to rise. Instead it’s worthwhile sitting back to see what happens over the next few months first.
 
So there you have it. Why copper has further to fall.
 
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