Technicals | May 04 2017
Bottom Line 03/05/17
Daily Trend: Up
Weekly Trend: Down
Monthly Trend: Up
Support Levels: 240 – 250 / 220
Resistance Levels: 286 / 295 – 300 / 335
Technical Discussion
High grade Copper has been trading sideways within a wide range since 2006. And even though a new bull run was potentially looking to establish at the beginning of 2011, price action ended up failing to get on with the job and proceeded to embark on a downward slide. It was only late last year last that the metal embarked on a 30% rise off a significant low point. Yet the rise unfortunately has been too little too late for a number of miners that have left the playing field, even with many that remain still being significantly damaged. Take ASX listed CuDeco (CDU) for instance that dropped over 10% yesterday with its price chart already significantly damaged. Heavily burdened with debt and trading around the 30c mark, it is certainly a far cry from a company that traded over $9.00 back in mid July 2006. It going to be a very long haul back at best for CuDeco. Let's check in on the High Grade Copper technicals.
Reasons to be bullish :'
→ 240 – 250 support needs to remain strong
→ surpluses reducing or reverting to deficits being monitored
→ price now looking committed to staying above the 200 day MA
→ immediate technical pattern only remains bullish above 240
The last 6 months is probably the best condition we have seen price action in for a many number of years. The swift move higher that commenced late last year was certainly solid with plenty of buyers about, and even though our expectation was for things to cool and for price to consolidate for a period of time, we are starting to get a little concerned with the length of time that the immediate consolidation phase is taking to complete. Overall, at least initially, we are not expecting anything more than a corrective A-B-C move higher to continue to unfold, yet the Wave-B ascending triangle / box type pattern has now overstayed its welcome. Simply put we have the five internal swings now in place, and as 'time' has now stretched the friendship, what we need to see from here is price starting to move higher again, with conviction, and pretty much immediately. If we don't see further upside follow through from here, then the pattern will become too top heavy, and simply fail and break to the downside. Not what we are looking for yet certainly possible. For now though we stay positive. Price action remains above the 200 day moving average and above the old resistance zone now acting as support, so all this in combination should see levels breakout higher rather than lower. Wrong below 240 !
Trading Strategy
As mentioned our only concern is the pattern getting more and more top heavy the longer this resting phase goes on for. Everything else in regards to what is evolving here looks bullish, yet we do need price to start making it's way higher and sooner rather than later to keep things robust. The conservative trade trigger is at 286 yet ideally we will be provided with a low risk opportunity to get in a little lower.
[Copper traded down -3.6% to US$2.51/lb on the LME last night – Ed]
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