Technicals | Apr 24 2015
Bottom Line 23/04/15
Daily Trend: Down
Weekly Trend: Up
Monthly Trend: Down
Support Levels: 255 / 240 / 220 / 168
Resistance Levels: 275 – 295 / 313 / 323
Technical Discussion
We continue to be a little perplexed with the Copper chart. With multi year lows tagged at the beginning of this year we were provided with a bounce, yet the old 275 – 295 support zone is now acting as strong resistance and for the time being this is going to be our nemesis. Yet if price can manage to get back above this newly aligned supply zone, then there is every chance a motivated move higher could unfold with targets up towards 340. That's how much we respect this significant support / resistance area.
Reasons to be bearish (optimism back above 295 only ):
→ U.S dollar strength dampening efforts for price to move higher
→ support at 240 yet no guarantees it will hold
→ old support 275 – 295 is now major resistance and needs to be overcome
We could very loosely tie in a reverse head and shoulders pattern which is strongly bullish if it triggers. The neckline is 291 – 293 which sits almost to the tick on our significant 295 line in the sand with further price confluence also coming in via the 200 day moving average. If triggered it portends to a move up towards 340 which will certainly put the unloved commodity back in favor. Basically this price area is the perfect storm in our view. Upside price action off the mid January lows has lacked conviction overall yet we would expect that to dramatically change above 295. The strong bearish divergence from our last couple of reviews has now fully unwound with some weaker bullish divergence now in play via last nights swing lower down to 266. Neutral to bearish until 295 can be conquered.
Trading Strategy
We took an aggressive long trade above the SaR at 251.86 with our stop now in profit below 255.25. It's been a real grind so far yet we would love to stay in the trade especially as a swing higher above 295 will likely start driving greater upside conviction which is exactly what we are looking for. As such we will continue to keep the stop where it is, especially as below 255 will portend to a retest of 240 support, or even worse, a major drop below. So respect the stop.
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