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Thursday, March 28, 2024

Commodities And Commodity Currencies At Key Juncture

Courtesy of Tyler Durden

Submitted by Nic Lenoir of ICAP

Copper has recently retested the former channel support now resistance. AUDUSD has tested and rejected the 50-dma, USDCLP (highly correlated to copper as Chile’s main source of revenue is… well copper!) looks like it is completing the second shoulder of an inverted H&S. USDBRL has pulled back towards the overlap level at 1,80 and 50-dma at 1.7949 which now acts as support. Without a daily close below 1.79 the market should rally towards 1.90 before going to test the next resistance at 2.0350. Finally USDCAD has retraced 76.4% of the recent rally and we anticipate a rally towards 1.0780/1.0870. If this last resistance is bypassed we should rally to 1.1275/1.1300.



Overall all commodity currencies seem on a key resistance and we expect them to underperform the USD here. The trade presents a good risk reward as the stop levels can be set relatively tight. It is still our fundamental conviction that copper is vastly overbought overall, and inventory levels are far too high for the price. Copper, China, CLP, or AUD are basically all part of the same trade which in our opinion is a bubble destined to a pretty dark future… Buyers beware.

Good luck trading,



Nic

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