Copper December Futures (LME: CMCUZ21).  

As per our previous recommendation on Copper December Futures as on October 20, 2021, a ‘Buy’ recommendation was  given on the commodity from the technical analysis standpoint. However, considering the recent price action, technical indicators analysis, and negative returns on the commodity we are of the view that it is prudent to hold the commodity at the current level as some recovery may be witnessed in the recent scenario. Hence, we give a 'Hold' rating on the commodity at $9789 (as on November 03, 2021, 2:31 AM (GMT-5), USA, Chicago, IL). The summary of our 'Hold' rating and price movement since the previous recommendation for copper is provided as below:

Price action and technical indicator analysis (on the daily chart):

Copper’ prices declined sharply by ~1.82 percent from the recommended entry-level of $9970.90 and made a low of $9510 on November 01, 2021. Prices are currently sustaining above the downward sloping trendline support zone at $9494. Also, the RSI (14-period) are trading at ~53.36 level that indicates rebound might occur from the current levels.

Conclusion:

Based on the above-mentioned price action, historical price resistance, and Relative Strength analysis, we recommend a ‘Hold’ rating on Copper December Futures and suggest investors to stay invested at the current price of $9789 (as on November 03, 2021, 2:31 AM Chicago, IL, USA (GMT -5)).

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Entry Price: For the recommendation(s), the Entry Price is assumed to be at a certain level with a slight deviation on either side. A slight deviation (Example 1.0%-1.5%) on either side in the ‘Entry Price’ can be considered depending upon the upside or downside potential expected and also taking into consideration the Target 1 levels and Stop-loss levels.

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the commodity. Commodity with high volumes is more liquid compared to the lesser ones. Liquidity in commodity helps in easier and faster execution of the order. 

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~80% Stop Loss of the Target 1 from the entry point.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is November 03, 2021, 2:31 PM Chicago, IL, USA (GMT -5).

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any commodity evaluation.

The above are illustrative analytical factors used for evaluating the commodity; other parameters can be looked at along with additional risks per se.

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