Improving Chinese economy prospect bullish for copper price
China’s manufacturing sector resumed growth in August. Will the copper price advance continue?
Caixin and Markit reported China's factory activity rebounded to a five-month high in August. Caixin China manufacturing purchasing managers' index rose to 50.4 in August compared with 49.9 in July. Manufacturing activity resumed expanding: readings above 50.0 indicate sector expansion, and contraction below. Caixin had mentioned the uncertainty of US-China trade dispute as a downside risk. Last Thursday China’s commerce ministry stated Beijing and Washington had set a tentative date for “early October” meeting for resuming trade negotiations. Improving prospect of US-China trade dispute resolution raises Chinese economy’s growth rate estimate. And China’s central bank last Friday cut the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to stimulate the economy. Improving growth prospect and stimulus measures for China, world’s biggest consumer of copper, is bullish for copper.
On the daily timeframe COPPER: D1 is retracing higher after hitting 29-month low in the beginning of September. It is testing the 50-day moving average MA(50), which is falling.
Technical Analysis Summary
Order Buy
Buy Stop Above 2.6467
Stop loss Below 2.4804
China’s manufacturing sector resumed growth in August. Will the copper price advance continue?
Caixin and Markit reported China's factory activity rebounded to a five-month high in August. Caixin China manufacturing purchasing managers' index rose to 50.4 in August compared with 49.9 in July. Manufacturing activity resumed expanding: readings above 50.0 indicate sector expansion, and contraction below. Caixin had mentioned the uncertainty of US-China trade dispute as a downside risk. Last Thursday China’s commerce ministry stated Beijing and Washington had set a tentative date for “early October” meeting for resuming trade negotiations. Improving prospect of US-China trade dispute resolution raises Chinese economy’s growth rate estimate. And China’s central bank last Friday cut the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to stimulate the economy. Improving growth prospect and stimulus measures for China, world’s biggest consumer of copper, is bullish for copper.
On the daily timeframe COPPER: D1 is retracing higher after hitting 29-month low in the beginning of September. It is testing the 50-day moving average MA(50), which is falling.
- The Parabolic indicator has formed a buy signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is below the signal line with the gap narrowing. This is a bullish signal.
- The RSI oscillator has not reached the overbought zone and has formed a bullish divergence.
Technical Analysis Summary
Order Buy
Buy Stop Above 2.6467
Stop loss Below 2.4804