- Copper prices falling again today to trade at 3-week low
- Price had rallied more than 25% since early May
- Market has breached 23.6% retracement
There’s been further weakness seen in Copper today after the large drop of around 3% last Friday, and traders are now starting to question whether the recent uptrend is over. Since making an interim low back in May, price has set off an an incredible rally, rising from a low of 5427 to a peak of 6923 last week. This 27% gain has been one of the biggest stories of the year but the declines seen in recent sessions are threatening to derail the push higher.
Taking fibonacci retracements of the rally can give some levels to watch for possible support or breaks lower. The 23.6% retracement (at 6569) is often seen as the minimum by practitioners of this strategy and today’s break below it could open up the way for a further decline. Should price close below here then this may be viewed as resistance with the 38.2% level at 6351 the next area of possible support.
Copper has rallied more than 25% from the low in May to last week’s high. Is a pullback now in store? Source: xStation
From a longer term perspective there remains several technical signs to be bullish on this market. After peaking at 10170 back in 2011 there was a prolonged slump in price as the market trended lower. in 2015 price made a low of 4304 and since then there has been a fairly strong recovery. A strong monthly gain towards the back end of last year saw the falling trendline broken above and the rally seen since May could be deemed to have broken the neckline in an inverse head and shoulders formation. This reversal signal remains valid whilst price remains above 6351 (a level that coincides with the 38.2% pullback of the latest rally). The textbook target for this setup would be at 8398.
A long term inverse head and shoulders reversal could be occurring. The textbook target for this setup would be 8398. Source: xStation
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