Technicals | Apr 17 2024
Bottom Line 16/04/24
16/4:
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $3.67 / $3.57
Resistance Levels: $4.50 zone (May 2024 contract)
All prices US$/oz Comex futures
Technical Discussion
Reasons to remain bullish longer term:
→ copper has strong demand potential in a clean energy environment
→ the move above $3.98 has been a confidence boost yet it now has to stick
→ Wave-(2) or (B) low has potentially now locked in (see chart)
In a base case emissions scenario according to recent data, copper demand will rise to over 50 million tonnes a year by 2050. For context, humankind has mined 620 million tonnes of copper to date, and the mining industry currently produces about 22 million tonnes a year. So we are going to have to mine roughly 2X what we’ve mined historically in the next three decades which is quite astonishing to think about if these projections remain accurate over the coming years.
The transition into a net zero economy and electrification of the global economy cannot happen without metals like copper. Nearly 50 percent of the global known reserves of copper today will be allocated just to those kinds of renewable and clean energy transition topics, so it’s a metal that is going to have heavy demand looking well ahead.
More copper will also be demanded by artificial intelligence, smart grids, and renewable energy storage. Then other demand factors will include a pickup in Chinese economic growth and the lack of a recession in the United States.
Technically we are continuing with our preferred wave count and positioning of the trend which is bullish longer term. It dictates that we have a higher degree Wave-(1) or (A) high locked in back in May 2021 with a Wave-(2) or (B) recently locking in on the 9th of February.
As stated in our video there is also a chance that the even higher degree larger cycle Wave-[B] has locked in on the 9th of February rather than all the way back in early 2020. Yet either way both counts are bullish looking well ahead.
As stated in our video the first mini breakout has recently occurred circa $399.00 with price action turning impulsive via a minor degree 5-wave move unfolding post breakout. This is a positive development combined with volume increasing over the past week or so indicating that buyers are still happy to pick up contracts at these higher levels.
Yet with a minor degree 5-wave move potentially drawing to a close, combined with price being overbought on both our daily and weekly divergence indicators and with resistance circa $4.50 looming, a breather may now be getting very close to hand. The next bullish confirmation move will be above $4.50 via a move that sticks, followed up by a move into new high all-time highs circa $5.34 on the May contract. Early days only yet so far so good.
Trading Strategy
‘We were stopped out of our Copper trade for a small profit in between reviews due to price action failing to get on with the job to the upside. Yet we would like to have another go at this based on our review tonight, so the new recommendation is to trade long at $3.99 with stops TBA. It’s make-or-break time now!’
In between reviews, our trade triggered at $3.99 and tonight we have raised our stop into some small profits circa $4.03 due to the solid reaction we witnessed post-breakout. It is now just a matter of whether we can steer clear of any noise once the aforementioned breather takes hold which we think will be sooner rather than later. One step at a time for now.
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).
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