Copper `Sell Signal' at $3.60 on Comex, MF Global Says: Technical Analysis

Nov 26 (Bloomberg) -- Copper is in a "corrective move” which may worsen should prices close below $3.60 a pound, according to technical analysis by MF Global Holdings Ltd.

The attached chart shows the New York-traded futures fell to an intraday low of $3.6110 a pound on Nov. 17, a level below a trend channel that has spanned from the middle of this year, said Anantharajan Paulpandian, a technical analyst at the brokerage in Singapore.

"If $3.60 broke, it’s a sell signal” that may trigger deeper declines, Anantharajan said in a phone interview yesterday. Support is located at $3.5250 and around $3.39, "where the commodity may fight back,” he said. "Copper is in a corrective move,” and if prices don’t stabilize above $3.3895, the correction may go far deeper, he said.

The most active Comex contract rallied to a 30-month high of $4.0875 a pound on Nov. 11 on expectations of increased demand from China, the biggest consumer, where manufacturing expanded. The metal traded at $3.7540 a pound today.

A trend reversal in the Dollar Index, which headed for a third weekly gain, is likely to contribute to further weakness in copper, Anantharajan said.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. A trend channel is two parallel lines, one connecting the metal’s highs and the other passing through the lows.