Glencore share price forecast as it approaches its correction zone

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Oct 21, 2021
  • Glencore share price has collapsed by more than 7% from its all-time high.
  • The stock dropped as coal and copper prices cratered.
  • The bullish trend remains intact for now.

The Glencore (LON: GLEN) share price has retreated sharply in the past few days as investors remain concerned about coal prices. The stock is trading at 368p, which is about 7.7% below its highest level this month. This means that the stock is approaching a correction zone.

Coal prices and Glencore

Glencore is one of the biggest mining conglomerates in the world. The company, which was started by Marc Rich, has a market capitalization of more than $133 billion and annual sales of more than $142 billion. The company focuses on several products such as coal, copper, zinc, nickel, and lead. 

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Glencore is also one of the biggest commodity traders in the world. The company sells millions of barrels of crude oil every day.

The company makes most of its money from its energy division, which includes coal. Unlike some of its peers like Anglo American, the company has resisted pressure to exit its coal business. 

The management believes that divesting the business will not make any meaningful changes for the environment.  For example, although Thungela Resources is still mining and selling coal even though it is no longer a part of Anglo American.

The Glencore share price has retreated this week as investors focus on the coal business. After making a parabolic rally, coal prices have plummeted this week after China signalled that it will intervene. The prices fell by more than 10% after the National Development and Reform Commission (NDRC) said that it could intervene in order to lower energy prices. 

Coal is not the only commodity that has slumped this week. After recording a strong bull run recently, the price of copper has declined by more than 5% this week. Therefore, analysts expect that this trend could continue and hurt Glencore.

Glencore share price forecast

Glencore share price

The daily chart shows that the Glencore share price has been in a spectacular bull run in the past few months. The price remains above the 25-day and 50-day moving averages. It is also above the important trendline that connects the lowest levels since March this year. At the same time, bearish volume has increased substantially in the past few days.

Therefore, I am optimistic that the GLEN share price will bounce back in the near term. If this happens, the stock will rise to the next key resistance at 400p.

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