Technicals | Aug 24 2023
Bottom Line 23/08/23
Daily Trend: Neutral
Weekly Trend: Down
Monthly Trend: Down
Support Levels: $3.56 / $3.19 (Sept 2023 contract )
Resistance Levels: $4.03 / $4.40 / $4.64 / $5.23 (all-time high)
All prices US$/oz Nymex futures.
Technical Discussion
Reasons to potentially remain bullish longer term (although price is continuing to struggle for now):
→ copper has strong demand potential in a clean energy environment
→ a move above $4.40 will be a confidence boost but it has to stick
→ price action has been corrective since 2008, yet the move off the March 2020 lows reverted to impulsive
→ Wave-(2) or (B) low positioning yet to confirm
The highest open interest (O.I.) is still with the September contract. It’s been about a month since we last reviewed Copper and in simple terms, it has continued to struggle to find the upside momentum we are looking for. To the extent that we have tonight adjusted our labeling on the chart to reflect that price is still in corrective mode as it continues to try and lock in a Wave-(2) or (B). EW theory is all about prove and disprove and for mine, the bounce off the July 2022 lows just can’t be labeled as an impulsive Wave-1. Combined price action taking too long to lock in a Wave-2. None of it has looked right for some time so we have simply binned this labeling and the immediate positioning of the trend.
What we have reverted to though off the May 2021 Wave-(1) or (A) highs is that the larger corrective Wave-(2) or (B) low is still trying to lock in and complete via an A-B-C process. Certainly not ideal and this positioning of the trend also has its faults from a trend positioning perspecitve. Yet for now it is the highest probability count we can come up with it. What this all reflects though is that copper price action is highly complex and difficult to interpret. One thing that is clear is that it is still in corrective mode and as such we just need to sit back and wait for it to tell us when it is ready to move north again in earnest. And not continue to aimlessly chop around and lack conviction in either direction.
Worth noting though is that any swing south from here below $3.56 will bring some Type-A bullish divergence to the table combined with price being well oversold on the dailies. So a potential cleanout catalyst that could finally bring some buyers back on the scene. Overall though we won’t be getting excited about Copper until $4.40 resistance can be conquered via a move that sticks. We would need to see such a move also present as strongly impulsive combined with above average volume attributes. Until then, all we can do is patiently wait.
Trading Strategy
Right at this juncture the breakout number is above $4.40 as stated. And until that occurs then copper will remain off the table from a trading perspective. So continuing to stay sidelined until we witness the official trigger.
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