Last year, copper was one of the best performing assets in the world as traders placed their hopes on an accelerating economy and increasing demand from auto manufacturers. They were right. The global economy had one of the best years with synchronized growth in the emerging and developed markets. This year, a strong dollar has weakened the emerging market economies and global growth has been affected by the ongoing trade conflicts. As a result, copper has declined by more than 15% and is currently trading at $2.77.
As the second half of the year goes on, traders will pay close attention to the copper prices, which are often seen as a barometer to the world economy. The GDP numbers released by China, the world’s largest consumer of copper will show the trends.
The current copper price is below the 100 and 200-day moving average as shown below. The RSI is at 36, which means that the copper prices could continue moving lower. However, these prices are ideal for contrarian traders who want to bet on the resurgence of the copper prices. An ideal entry point will be when the price will cross the oversold RSI level of 30. This price is likely to be at either $2.6 or $2.5, which is the same price as the lower band of the Bollinger Bands.