Copper may rally 3.9 percent to the highest price since early May after closing above the “neckline” in a technical double-bottom formation, according to strategists at Citigroup Inc. The attached chart shows that the metal fell to an eight- month low on the Comex in New York of $2.72 a pound on June 7, rallied for almost a month, and then slumped to a three-week low of $2.8555 on July 1. Copper probably will rally to $3.35 in the “short term,” after closing above the “neckline” at $3.10 on July 22, Citigroup’s Tom Fitzpatrick and Shyam Devani wrote in a report dated yesterday. A rise to $3.35 would be the highest price for a most- active contract since May 3. Copper for September delivery gained 3.8 cents, or 1.2 percent, to $3.223 a pound yesterday on the Comex. The line that connects the peaks between troughs is the so- called neckline. In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. The metal may also rally to the more “aggressive target” of $3.46, the analysts said, citing a reverse head-and-shoulders trading pattern. The pattern is formed when a security makes three consecutive troughs, with the middle being the lowest. To contact the reporter on the story: Millie Munshi in New York at mmunshi@bloomberg.net.

Source