Shanghai copper targets 40,020 yuan

SINGAPORE: Shanghai copper may break a support at 40,740 yuan per tonne and fall more to 40,020 yuan, as it could have completed a rebound from the Jan. 26 low of 38,860 yuan.

The rebound has been driven by a wave (4), the fourth wave of a five-wave cycle that developed from the Nov. 24, 2014 high of 47,970 yuan. This wave has peaked around a resistance at 41,900 yuan, the 38.2 percent Fibonacci retracement on the fall from the Dec. 15, 2014 high of 46,820 yuan to the Jan. 26 low of 38,860 yuan.

This wave will be totally reversed by the current wave (5). A drop to 40,580 yuan may confirm both a break below the support at 40,740 yuan, the 23.6 percent level, and the target at 40,020 yuan, the 14.6 percent level.