Copper Update: More down side potential

14 AUG 2018

Sellers maintain their grip on the market after pushing beyond our earlier price projection at 2.7825. The lack of a bounce or even consolidation clearly reflects the bearish pressure in copper at the moment. We expect a continuation of the bear market towards 2.5130 <> 2.4630. This area consists of a decent pivot cluster formed in 2016/2017. Some cooling can be expected around this area. However, bearish momentum is way too high to expect a serious turnaround or start of a bull market once reached. Much, much more is needed to even start to think about long-term buying.

Overall, our focus is still on the down side even though some short-covering is justifiable between current levels and the aforementioned support cluster. New short-entries are only worth contemplating around 2.8290 <> 2.99 (if at all reached).

  • Near term trend: negative
  • Long term trend: negative
  • Outlook: fierce down trend, negative
  • Strategy: hold-short / partial short-covering
  • Support: 2.7825 / 2.5130 / 2.4630-
  • Resistance: 2.8290 / 2.99 / 2.9040
  • Outlook cancelled/neutralized: 2.9040

Weekly chart Copper (continuous contract, Oanda)

4 JUL 2018

Sellers continue their drive South. The support at 2.8520 has failed to trigger any kind of recovery, leaving the road free of possible turning points until about 2.7825. Note that the break below the weekly cloud support is very significant and clearly signals the start of a much larger primary down trend for months to come.

Any bounce up to 2.995 is worth sell into. Note that other base metals are showing similar developments, albeit with less violence.

  • Near term trend: negative
  • Long term trend: negative
  • Outlook: fierce down trend, negative
  • Strategy: sell rallies
  • Support: 2.8520 / 2.7825-
  • Resistance: 2.995 / 3.02+
  • Outlook cancelled/neutralized: 2.995

Weekly chart Copper (continuous contract, Oanda)

19 JUN 2018

The intraday sell-off is obviously nasty for those caught on the buy side. It does however signal a major change in sentiment on the longer term as well. A double top formation has now been set and a re-test of the pivot-lows at 2.9730 is expected. Dipping below this area triggers a deep correction or probably even a new down trend on the longer term.

We have adjusted our strategy from trailing stop to exit-long. Furthermore, we are preparing for a new short-entry after a minor intraday bounce and/or below 2.9730. Note that other base metals are showing similar developments, albeit with less violence.

  • Primary trend: neutral
  • Outlook: more weakness expected, negative < 2.9730
  • Strategy: exit-long, prepare for more weakness
  • Support: 2.9730 / 2.8520 / 2.7825-
  • Resistance: 3.31
  • Outlook cancelled/neutralized: n/a

Weekly chart Copper (continuous contract, Oanda)

29 MAY 2018

Prices are holding within the longer term uptrend. The underlying uptrend thus remains intact but keep in mind that the trend is rather mature and thus prone to a reversal. New buying is too risky even though a bit more upside is expected over the next 3-6 months. Existing longs can be maintained with trailing stops around 2.8990.

  • Primary trend: positive
  • Outlook: late phase uptrend, moderately positive
  • Strategy: hold-long with trailing stops
  • Support: 2.8990 / 2.8520 / 2.7825
  • Resistance: 3.31+
  • Outlook cancelled/neutralized: below 2.8990

Weekly chart Copper (continuous contract, Oanda)

21 MAR 2018

The near term correction occurs within the longer term uptrend. Even though we expect a considerable correction over the next weeks and months, down side potential doesn’t seem to be large enough to actively short this market. Also, we expect the correction to be an ABC-correction which are choppy, drawn-out and generally difficult to trade effectively. Closing/protecting longs and avoiding further exposure is probably best for the time being.

  • Primary trend: negative
  • Outlook: deep correction in longer uptrend, moderately negative
  • Strategy: exit-long & avoid
  • Support: 2.8520 / 2.7825
  • Resistance: 3.17 / 3.2510
  • Outlook cancelled/neutralized: n/a

Daily chart Copper (continuous contract, Oanda)