Comex Copper Futures Analysis – June 11, 2013

July Copper futures plunged overnight after the Bank of Japan failed to provide the additional stimulus that investors were hoping for. The central bank’s decision to refrain from extending the duration on its ultra-low interest loans to banks sent a signal to global investors that perhaps the aggressive stimulus cycle may be coming to an end or at least slowing down.

The move by the BoJ also opens the door for the Fed to begin tapering its own aggressive stimulus program which could further pressure on higher risk assets like copper. In addition to the dumping of assets because of the interest rate spike, the news over the week-end that China’s economy is still exhibiting sluggish growth also put a bearish spin on the market.

Technically, the overnight break has put July Copper in a position to break through a Fibonacci level at 3.1859 and an uptrending Gann angle at 3.1825. This move could trigger an acceleration to the downside since the nearest support angle is at 3.1125.

On the upside, resistance comes in at a 50% price level at 3.2303 and a downtrending Gann angle at 3.2380.

The tone of the market has been set by the move by the Bank of Japan. Copper traders are likely to get additional clues from the action in the Treasury markets and the stock market. If stock indices fall sharply then look for copper traders to piggy-back the move.