(Bloomberg) -- Copper may rise to more than $5,000 a ton by the end of next month, a level not seen since October, as the metal retraces some of the drop from 2008’s record, Standard Chartered Bank said, citing trading patterns.After a so-called consolidation, the contract may climb to $5,156 a ton within a month, a 38.2 percent retracement of the fall from the 2008 high, London-based David Barclay, the bank’s commodity strategist, wrote in a report yesterday. The 50-week momentum indicator was still “turning higher,” Barclay wrote.
Copper for delivery in three months on the London Metal Exchange has advanced 43 percent this year, and traded at $4,394.75 at 9:46 a.m. Singapore time. The metal, used in pipes and wires, reached a record $8,940 a ton July 2.“The weekly chart still shows a basing pattern forming, with the 61.8 percent retracement of the fall from the $8,940 peak attracting at $6,601,” Barclay wrote, referring to a percentage that’s part of the Fibonacci sequence.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break of a so-called level of resistance indicates that a price may move to the next level, while a failure indicates a trend may stall. Sell orders may be clustered at resistance levels.After reaching $5,156 a ton, copper may target $5,878, Barclay wrote, citing a basing pattern, which on charts resembles a series of trades in a narrow range. Once a share or asset’s price breaches the top of a range, a rally may follow.
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