Copper Technical Analysis - Could the US Democrat house win be good for copper stocks?

Wednesday, 7th November 2018 10:23 - by Rajan Dhall

For those of you that look at basic material stocks, last nights midterm elections could have a serious impact on your portfolio. Now President Trump has lost the house majority he will face stern opposition before adding more tariffs to China. It's hard to know where all the new house additions stand at the moment but it's important that Trump could potentially face some resistance.

Looking at how equities have opened this morning (7/11/18) it's clear to see that markets are pleased by this result. The budget deficit and government shutdowns are also on the agenda making it more difficult for decisive decisions to be made for Trump. 

Looking at the technicals then, copper has dropped off slightly since hitting the USD 3.29/lb high earlier in the year. This was due to international geopolitical issues surrounding the US and China relationship. In more recent times price consolidated between  USD 2.55 and USD 2.86/lb, it seemed price was stalling while traders and investors awaited the outcome of the midterms. Now that it is out of the way it seems base metals traders seem bullish as copper futures rose 1.55% this morning. In terms of resistance levels on the upside, we have two in close proximity. USD 2.94/lb looks to be strong as it was the consolidation low between late 2017 and early 2018. If that breaks the previous value area at USD 3.06/lb is the price where most contracts exchanged hands and this could be a sticking point. On the RSI I have drawn a trendline and if the momentum continues to the upside look out for how price will react around there as a break will be seen as bullish.