In early 2017, the price of copper broke a 6-year downtrend and has continued to head higher ever since. Despite a short-term blip in the recent rally, the price of copper continues to look as though it may head higher.
The latest with Oz Minerals (ASX:OZL)
Oz Minerals (ASX:OZL) is an Australian copper producer listed on the Australian share market which can provide investors leverage to the copper price. At time of writing, the Oz Minerals share price average 12-month target amongst the big brokers indicates more than 12% upside from current levels. However, during their quarterly update to the market in October 2017, OZL indicated that it was trying to sort out a power deal for the mine at Prominent Hill. Until it gets resolved, this issue will remain a drag on the Company’s share price. Despite that, the shares are already showing some mildly positive signs on the chart.
Oz Minerals Chart
You will notice that the shares have established some uptrend support during the last couple of years. Also note that the trading range is starting to tighten up. At the moment, OZL is hugging the underneath of an obvious resistance line. As it tests this line, traders should be alert to any break to the upside. The more it hugs this line, the more chance we have of an upside break. A breakout would be a sign to buy OZL, and traders can then use that breakout point as their new stop loss level. For the moment, we need to see it hold above the uptrend line (the diagonal line heading up since early 2016). But the longer that OZL trades in this tightening range, the closer we are to seeing it break out – in one direction or the other.
Michael Gable is managing director of Fairmont Equities.
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