Copper was quick to recover from the 2009 low as it rocketed higher. That ended at a peak in early 2011, up about 200% from the low. But then when the equity markets continued to move higher copper did not. in fact it started a 5 year March to the downside, bottoming at the beginning of 2016. This retraced about 90% of the move up.
The chart below shows that along the way copper passed under its 200 week SMA in early 2013. A Death Cross happened a couple of weeks later as the 50 week SMA also crossed under that 200 week SMA. Copper has stayed under that 200 week SMA until recently. After a push off of the 2016 low it rocketed higher at the end of October and then settled into a consolidation. About a month ago copper pushed above its 200 week SMA for the first time in over 3 years. It could not hold over it though and pulled back.
A closer look at the last 6 months shows the consolidation in a rising wedge. The top of the wedge is now being run through by that 200 week SMA, perhaps pushing price lower. The bottom is now in line with the rising 20 week SMA. And the Bollinger Bands® are squeezing too. The wedge tightening, with the SMA’s and Bollinger Bands squeezing all adds up to a move coming very soon. Rising wedges often break to the down side, and if this does it would give a target to about 2.25.
But they can also resolve higher. In that case the 38.2% retracement of the move lower, and prior high from April 2015 may give the first stall point, right at the round number 3.00. Momentum currently suggest that you favor the downside, with the RSI falling toward the mid line and the MACD crossed down. Time to prepare.
DISCLAIMER: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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