LME copper may fall to $8,312 in Q4

SINGAPORE: LME copper may fall to $8,312 per tonne next quarter, due to a reversal of the uptrend from the 2020 low of $4,371.

The reversal has been confirmed by the five-wave structure of the trend and the deep drop from the May high of $10,747.50.

A retracement analysis on the uptrend suggests a wide target zone from $6,807 to $8,312, formed respectively by the 61.8% and the 38.2% retracements.

Even though these retracements are not precise, they do serve as good references. Given that copper has broken a support at $9,243, it is likely to extend its loss to $8,312.

In terms of duration, the current fall may last far beyond 2021, as the reversal of the uptrend from $4,371 marks the completion of a corrective wave cycle from $4,318.

The cycle took more than five years to finish, even a fifth of this duration would be roughly one year. The metal may have entered a bear cycle without much warning.

A rise above $9,243 would complicate the picture, as it somewhat defies a clear classification. It could be a resumption of the uptrend or an extension of the bounce from the August low of $8,740.

Only a break above $9,817 could signal a continuation of the uptrend. On the daily chart, a projection analysis on a downward wave c from $9,975.25 reveals a target of $8,239, which is near $8,312.

Both the support at $8,312 and $8,239 are strong enough to trigger a decent bounce. When working together, they are likely to temporarily hold.

Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.