China’s Politburo has announced plans for a “moderately loose” monetary policy and “more” proactive fiscal policy in the coming year, reminiscent of measures taken during the global financial crisis (GFC). This bold move has sparked excitement in the markets, particularly in the industrial metals sector, with iron ore hitting two-month highs and breaking resistance at $106. The momentum is expected to continue as investors eagerly await further details from the Central Economic Work Conference (CEWC) later this week.
Iron Ore on a Bullish Trend
In overnight trade, SGX iron ore reached new heights, surpassing the $106 resistance level that had hindered its progress in recent months. Technical indicators such as MACD and RSI (14) are signaling a bullish trend, with the potential for a retest of $109.05 in the near future. Traders looking to capitalize on this momentum may consider establishing long positions above $106, with a stop-loss below the figure or the 200-day moving average for protection.
Copper Breaks Downtrend, Eyes Key Moving Averages
COMEX copper has broken out of its downtrend following China’s stimulus announcement, but has encountered resistance at the 50 and 200-day moving averages. While indicators suggest a bullish outlook, it would be prudent to wait for a clear break above these levels before entering long positions. Potential targets for copper include $4.50 and $4.79, depending on the extent of stimulus measures unveiled.
Overall, the markets are abuzz with anticipation as China prepares to implement significant economic stimulus measures. Investors should keep a close eye on developments from the CEWC and consider potential opportunities in the metals sector as a result of these policy changes.