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.
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.
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.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
This report may contain advice that has been prepared by The Chartist Pty Ltd (ABN 40 641 323 051). The Chartist Pty Ltd is a Corporate Authorised Representative (CAR No. 1282007) of Shartru Wealth Management Pty Ltd ABN 46 158 536 871, AFSL 422409. Any advice is considered general advice and has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on this advice you should therefore consider the appropriateness of the advice having regard to your situation and your own objectives, financial situation and needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. If the advice relates to the acquisition, or possible acquisition, of a product (other than a security e.g. a CFD) then the client should obtain the relevant Product Disclosure Document and consider it before making any decision about whether to acquire the product. Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.
Risk Disclosure Statement
THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITIES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.
Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On