Last September I posted a monthly chart of Copper futures to warn you that the metal has been approaching the area of strong multi-year resistance. In that very same post, I set specific triggers to watch for further price action.
Recently, one of those triggers was broken, and now it’s time to update the chart.
Chart. Copper Futures Monthly: Crucial Support Was Broken
One year has passed since President Donald Trump was elected to office. That month I wrote a post about copper’s ultimate monthly performance compared to other commodities thanks to the new president’s promises of huge infrastructure rebuilding.
Below is a 1-year performance chart of copper to see how the metal has been doing since Election Day.
Chart 1. 1-Year (from November 8th, 2016) Copper Performance
Greed is one of the strongest human motivators. It is easy to get greedy, but it is hard to push it down after it gets extreme. The main point of my previous update in August was to focus your attention on the price action in the $3 area as the price could hit this psychological level and then retreat. My advice was to book profits and wait to see what would happen next.
I hope that you heeded my advice and didn’t get greedy as copper was pushed down below the $3 level very quickly.
In the same post, I thought that this upside move in the metal that had started last year could just be a consolidation before another drop down. In the chart below I go into more details about it.
Back in May, I posted an update for copper where I shared my concerns about the possible negative impacts of the cooling Chinese economy. At the same time the technical chart didn’t confirm those concerns and on the contrary, showed a possible upside move for the metal.
In this post, I would like to share some macro economic charts and an update of the technical chart.
Chart 1. Copper Vs China Industrial Production (Monthly)
Chart 1. Crude Oil-Copper Correlation: Gap Widened
Chart courtesy of tradingview.com
Another attempt by oil to close above the psychologically important $50 level (black dashed horizontal line) has failed. This was the third and a good try, and it was after a good correction in July, which makes bulls nervous as they lose their patience. Copper couldn’t keep the correlation gains achieved in July as it didn’t follow the rising crude last month and on the contrary, it moved the opposite way below the $2.2 level. The gap between them widened.
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