Copper : A long term reversal on the horizon? (JJC) – 14/07/17

We incorporate the ETN Ipath Bloomberg Copper (JJC) in our Watchlist, as it presents technically speaking an attractive configuration, which also seems to be justified by structural factors. JJC incurs a fee of 0.75%, with a liquidity of $ 56m. The index replicates futures contracts on copper (traded on COMEX).

Despite short-term issues related to excess capacity / oversupply and lower Chinese demand, the medium- to long-term prospects are excellent for copper, due to the expansion of the electric car (3 to 4 times more copper needed in comparison with a conventional car) and renewable energies, which use a lot of copper (notably in batteries), but also in rapidly expanding electric transport.

Global growth is also a driver for  copper prices.

The long-term charts show that a crossover of the monthly  EMA 13 & 26 months is about to occur, which would put an end to an active downtrend active for 6 years (September 2011). The monthly MACD has already crossed positively and is moving towards the zero line, which is another positive factor. Moreover, the weekly charts go in the same direction with an imminent MACD crossing and ascending moving averages.

JJC : monthly data

JJC : weekly data