Glencore share price forms dangerous patterns as commodities sink

Glencore (LON: GLEN) share price collapsed to the lowest level since August 4 as signs of a global slowdown emerged. The stock collapsed to a low of 440p, which was about 14% below the highest level in August. Other mining stocks like Endeavour Mining, Antofagasta, Rio Tinto, and Anglo American also crashed.

Global slowdown 

Glencore is a leading mining and trading company that has a storied history. It was established by Marc Rich, one of the best-known white-collar criminals in years. Marc Rich changed the world and was one of the best creators of wealth in his time. 

Glencore deals with some of the most popular commodities in the world. Some of the top commodities it mines and sells are copper, nickel, ferroalloys, cobalt, and zinc among others. In addition, the company deals with energy products like coal and oil.

The recent results showed that Glencore had an adjusted EBITDA of over $18.9 billion. Its coal and gas benchmarks had an EBITDA of over $10.3 billion while its marketing EBIT more than doubled to over $3.7 billion. It also managed to reduce its net debt to over $2.3 billion. 

Glencore share price has done well in 2022, helped by its coal and natural gas marketing business. Coal is notable for Glencore since it is one of the biggest coal traders in the world. Its demand will continue being vibrant in the coming months as Russia continues to squeeze Europe.

Glencore shares crashed after the latest economic data from China. According to Caixin, the country’s manufacturing PMI dropped from 50.4 in July to 49.5 in August. This decline was lower than the median estimate of 50.2.

As a result, the price of most commodities crashed since China is the biggest buyer. Copper crashed by 2% while zinc and nickel crashed by more than 3%.

Glencore share price forecast

The daily chart shows that the GLEN share price rose to a high of 548p on June 7 of this year. It then dropped to a low of 395p. The shares then rebounded and hit the key resistance at 515p. It has then moved below the 25-day and 50-day moving averages.

The Relative Strength Index (RSI) has moved from the overbought level at 70 to the current 37. It has also formed what looks like a triple-top and a head and shoulders pattern. Therefore, there is a likelihood that the shares will keep falling as sellers target the next key support at 395p.