Technicals | May 18 2017
Bottom Line 17/05/17
Daily Trend: Up
Weekly Trend: Down
Monthly Trend: Up
Support Levels: 240 – 250 / 220
Resistance Levels: 270 / 286 / 295 – 300
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 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 now left the playing field under the heavy burden of debt. Bigger picture though we do see the potential for higher, yet it is critical that 200 holds strong from here. We have a major red flag on the metal below this number. Let's check in on the High Grade Copper technicals.
Reasons to be bullish :'
→ 240 – 250 ideally needs to remain strong – 200 critical
→ surpluses reducing or reverting to deficits being monitored
→ price now looking committed to staying above the 200 day MA
→ longer term bullish reverse head & shoulders triggers at 286
Even though the longer term chart has the potential for a strong move higher eventually, our main concern is that price action overall may become too top heavy, and simply collapses to the downside. An early heads up on this happening will be a move below the Wave-(C) low circa 200. This is where we have also labelled the higher degree Wave-[B] as completing although some ongoing coiling within a triangle pattern may well see the positioning of the Wave-[B] moved a little higher to cater to the five internal swings that these patterns require. Our main interest though in regards to price remaining robust around present levels is the strong volume recently witnessed in November 2016.
Ultra high volume with the monthly price bar also closing up towards the months highs. Plenty of buyers came in here and we continue to view this as a positive moving forward. The other pattern is the reverse head and shoulders pattern. This is bullish in its present form so if symmetry can hold, we will be expecting this to break to the upside above 286 with the target aligned to such a move looking for 386 medium term. We doubt whether price will be able to achieve much higher for now, yet it could be the next stage that reinforces the potential for the larger bullish breakout down the track. For now we stay optimistic bigger picture above 200.
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 action continuing to prove to keep things robust. The conservative trade trigger off the aforementioned pattern is at 286 yet we may be provided with a low risk opportunity to get in a little lower.
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