Copper By The Charts: A Long-Term View

Doctor Copper, the metal with a PhD in Economics as they say, has long been used as a barometer of the strength of the economy. Chairman Bernanke and his Federal Open Market Committee gave us their latest view on the future of the economy today. Prognosis: weak growth with low rates expected for at least another two years. How does the good doctor respond? The daily chart responds by showing movement from one symmetrical triangle to another one slightly higher. Currently at the top rail of that triangle and with support for a move higher from a bullish Relative Strength Index (RSI) and a positive Moving Average Convergence Divergence indicator (MACD) the prospects are good for a move higher.

A break above the triangle carries a Measured Move higher to 4.35 but clearly there is a lot of congestion to work though between the current 3.75 and 4.00 first. This could take some time. Moving out to the weekly view shows that it is the retest of the 23.6% Fibonacci after touching the 50% Fibonacci that is controlling the present, with 4 touches since the peak. It also shows the importance of the 4.15 level along the way as the parallel symmetrical triangle. if one thing is clear on this timeframe it is that the trend over the last two years has been sideways with a tightening range.

It also raises the target on the break above the top rail to 4.80 and then 6.00 over the bigger triangle. The RSI currently supports a push higher but has been oscillating around the mid line with a MACD that is flat. If it goes higher there is support but not a strong impetus to get there. Finally on the monthly timeframe the price is firmly in the middle of the Median Line and Lower Median Line of the bullish (green) Andrew’s Pitchfork. This means it could be attracted either way and with the RSI flat at the mid line and the MACD negative but improving, there is no really bias.

The one solid positive for Copper is that the bullish Pitchfork is taking control away from the bearish (red) one. If the Median line wins then thee is a lot of upside potential. But nothing to do until then. So Copper agrees with Bernanke. Muddling along for now with some potential.

So look for a beak above 3.75 to get the ball rolling higher and over 4.00 to give it more momentum. From there 4.35, 4.80 and 6.00 become important targets.

This is the fifth in a series of A Long Term View On …. articles that will appear of the next few weeks.