The following weekly chart of COPPER shows that its price has fluctuated wildly around the 2.47 level in an increasingly narrowing triangle formation since the end of the 2008 global financial crisis. At the moment it’s acting as major support and happens to coincide with the triangle apex. A drop and hold below this level could see a sharp downdraft in this commodity to around 2.20 (price support combined with the bottom of the triangle and a secondary volume bump), or lower.
Major overhead resistance sits at the confluence of the 50 & 200-month moving averages with the Volume Profile POC around 2.70. A spike and hold above this level could see price rise to around 2.99 (price resistance combined with the top of the triangle and a secondary volume bump), or higher.
Until such time as price breaks through either of these barriers and holds, I’d watch for increasing volatility in the near term.
The technicals are giving mixed signals on the daily chart as to breakout direction.
On a negative note, the RSI is trading below 50, while the MACD and PMO have recently formed a bullish crossover, and a bullish Golden Cross has formed on the moving averages…albeit on a recent weak and tentative price bounce.
These technicals can be monitored for confirmation and sustainability of either directional breakout. They must, either, hold on a rally (and the RSI must break and hold above 50), or reverse on a drop in price on this short-term timeframe.
Finally, COPPER has, historically, mirrored, more or less, China’s Shanghai Index (SSEC) over the years, as shown on the following monthly comparison chart.
I last wrote about the SSEC in my post of February 3. Since then, it rallied and sits just above 3000, a level I had identified as major resistance.
If it fails to hold above 3000, I’d watch for a sharp drop to 2500, or lower. If that happens, I’d predict that COPPER would also drop…another potential useful directional gauge.
