Technicals | Oct 13 2021
Bottom Line 12/10/21
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: US$3.84 / US$3.45 (Dec 21 )
Resistance Levels: US$4.90 / US$5.14 (all time highs)
[All prices USD Comex futures]
Technical Discussion
Reasons to remain bullish longer-term :
→ copper surpluses suppressing price in the past yet strong demand likely in a clean energy environment
→ US$3.45 old resistance has potentially reverted to support
→ price action corrective since mid-2006, yet the move off the March 2020 lows has reverted to impulsive
From a bigger picture perspective, we are still liking the looks of Copper price action very much. We remain committed to our longer-term positioning of the trend that higher levels are going to be seen over the coming years. Especially as we have the March 2020 lows (see chart) labelled as a higher degree Wave-[B]. What this positioning of the trend implies is that we now witness either a higher degree (A)-(B-(C) three-wave move north off these lows or an even stronger larger 5-wave move.
So we have labelled the May 2021 high as Wave-(1) or (A) that subdivided into a 5-wave pattern within itself. The correction now has been going on for long enough to be defined as a Wave-(2) or (B) in progress, yet it still may require more time before it completes. Generally, the bare minimum retracement for a Wave-(2) or (B) would be a -38.2% retracement of the previous move north.
This measures in at US$3.78 with the low thus far achieved being US$3.98. These waves also typically pull back to the -50.0% retracement zone which comes in at US$3.45. An area that has confluence to horizontal support. So further depth may still be required here.
The other interesting pattern that could be evolving is the larger flag pattern as talked about in our video. The thing with these patterns is the immediate flag aspect generally requires at least five touches of the upper and lower boundaries of the pattern. At the moment we have only witnessed four clear cut touches.
This also backs our leaning towards more time still being required before the Wave-(2) or (B) completes. It could be getting close though, especially as the 200 day MA is continuing to be supportive, and last night price bar was quite strong combined with a slight increase in volume. So some buyers clearly taking an interest above the US$4.00 price point for now. Basis this we will keep an open mind on it in relation to whether the Wave-(2) or (B) has been completed or not.
Trading Strategy
When we get an indication that the Wave-(2) or (B) has finally completed, we will then be on the lookout for a low-risk opportunity on the long side to try and capture as much of the expected Wave-(3) or (C) north as we can. As mentioned in our review tonight the possibility is still there that more time plus further depth to the immediate Wave-(2) or (B) is still going to be required. We will keep it on our watchlist.
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