Watch this Price Level in Copper – Monthly Structure

Jun 14, 2009: 6:09 PM CST

Copper prices are coming into an interesting confluence on the Monthly Chart.  Let’s draw a large-scale Fibonacci Grid and also note the EMA structure on Copper’s Monthly Chart.

Price failed to break above $400 on the index here and collapsed hard in mid-2008 like all other commodities.  Preceding the collapse was a type of “Three Push” pattern that was complete with a negative momentum divergence and long upper-shadow candles.

One could have also classified it as an ascending triangle that broke to the downside.  Also, one can count out a clean 5-wave Elliott Pattern into the highs (with the dynamic 3rd wave being the move from 2005 to mid 2006 as Wave 4 terminated in the 2007 lows and Wave 5 peaked in 2008).

Learning the lessons from the past, we now turn to the present.

Price has doubled from the $125 lows of 2008 to the current level just shy of $250, which could prove to be significant resistance that many people might miss if they aren’t looking at the monthly chart.

Price is currently struggling to overcome the 38.2% Fibonacci retracement at $238.  If price can rise above this level, then it would have to content with the confluence (crossover) of the 20 and 50 month exponential moving averages that are aligning at $250.

You could classify this as a “Cradle Trade” Sell Signal coming up here, if price manages to rally to the $250 level.  If not, we may already be getting ready for a new swing down.

Whether or not price can rise above $250, one has to note that sellers could emerge strong at this level, forcing a pullback – if anything, bulls are going to have to overcome these technical levels to continue the strong rally higher.

If you don’t want to get aggressive here, it might be worth doing additional research to see if you might want to lighten up your longs in copper here and buying back should price close strongly above confluence resistance at $250.  Note that the 50% Fibonacci retracement comes in at $268 even if the $250 level is cleared.

Continue studying the chart for additional insights, but realize that a battle could ensue at the $250 level that bulls are going to need a lot of strength to win.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

7 Comments

7 Responses to “Watch this Price Level in Copper – Monthly Structure”

  1. Tan Haw Swee Says:

    Thanks, many many thanks , you are superb!!! I am holding one container load of copper at the port pending for sell awaiting the right signal and you have just give me the right one.

  2. Tan Haw Swee Says:

    I would say it is going to be a sideway after 38.2 more towards consolidating for three months and then after that the price will spike up again.

  3. Corey Rosenbloom, CMT Says:

    Tan,

    Be sure to do additional research and don't just take my word for it.

  4. Corey Rosenbloom, CMT Says:

    That's certainly a possibility but it seems the recent upwards action had more of a 'corrective' shape and is overextended into confluence resistance. We'll see.

  5. Tan Haw Swee Says:

    Back here we have a stringence custom clearence imposed for the imported good to get into china recently, this have very much effected the on time delivery to the mill for production, this could be one of the major factor that course the demand price overextended to the confluance level. wat you think the consequence like be once the custom clearance been expedited.

  6. Tan Says:

    hey , tis really go side way is'nt it

  7. Tan Says:

    hey , tis really go side way is'nt it