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Getting hammered Posted: Fri, 17 Oct 2008 [miningmx.com] -- WITH STOCK MARKETS worldwide getting hammered, we look at a commodity that affects the prices of a number of large mining stocks on the JSE, namely copper. More downside in copper is expected, which typically points to more weakness in BHP Billiton (the JSE's largest stock) in the short term, at least.COPPER (US$) - MORE DOWNSIDE Click on image to enlarge Trend : Down.Strategy : Sell short the rallies until the target is reached. * The copper price has broken down from a large rising wedge (lines 1 and 2). It's pointing to a still lower target to come. * The daily relative strength index (RSI, on top) is giving a positive divergence from its oversold level, which typically warns of a rally. But right now any rally is likely to be short-lived. * Sell short the bounces. There's a reasonable chance of a good rally to the 6 500 level before we get another big leg down. * Minimum downside target is 5 250 - ie, the height of the wedge projected down. Note: Line 3 resistance is at the 7 250 level and needs to get broken before any bull trend renewal. * Place your stop-loss for shorting as a breaking off the high of a reversal day down after a few days' rally. Please note: For more charts by the author on shares, indices and commodities please go to www.themarket.co.za.
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