Copper 'Top' Signals Decline, Barclays Says: Technical Analysis

SINGAPORE, Aug. 18 -- Copper prices may drop this week as the evidence grows that the metal has reached a "top," Barclays Capital said, citing trading patterns.

    The uptrend in copper is "faltering" ahead of $6,620 a metric ton, which represents a 62 percent retracement of the decline from July 2008 through December, using Fibonacci analysis, Barclays commodity strategists wrote in a report yesterday. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.

    "The signs for a top in copper are becoming increasingly compelling and what we are looking for this week is a move below $5,845/$5,915 to squeeze out trend-followers," the analysts said. "If the trendline gives, then we would assume copper has topped and would expect profit-taking to take hold."

    Copper for delivery in three months on the London Metal Exchange, which has doubled this year, traded at $6,125 a ton at 10:44 a.m. Singapore time, rebounding after a two-day decline.

    The metal used in homes, cars and appliances is the biggest gainer this year among 19 commodities tracked by the Reuters/Jefferies CRB Index.

    (Source: Bloomberg)