Copper Prices in 2009 with Weekly View

Aug 24, 2009: 11:21 AM CST

Many analysts find charting Copper Prices helpful for assessing the strength of the broader economy.  After all, if demand for copper is increasing, a major reason could be that construction activity is increasing, which signals a strengthening economy.

With that in mind, let’s take a quick look at Copper Prices (Index) for 2009 and then see the larger weekly structure.

On the daily frame, we see that copper prices have risen from $130 to $290 so far in 2009, which is a roughly 123% increase (more than doubling) which is an amazing feat in such a short period of time.

If this trend continues, it would signal powerful (bullish) undertones for the broader economy.

For now, looking at the daily structure, it would appear odds strongly favor a continuation move, thanks to a positive trend structure along with a positive orientation to the daily moving averages – which should continue to hold as support (as seen above) until proven otherwise.

With this bullish continuation picture in mind, let’s take a look at the weekly structure and note a key level to watch as resistance, which could be the last ‘line in the sand’ to challenge this upward momentum.

Copper Weekly View:

Taking a standard Fibonacci grid from the 2008 highs north of $400 to the same 2008 lows in December near $125, we see the resulting Fibonacci grid.

Price found resistance at the 38.2% level (which reflected the 50 EMA) as a price pause occurred, but once price cleanly broke this level, we broke solidly through the 50% line and are now challenging the confluence of the 61.8% zone with the 200 week SMA – both of which converge at the $290 to $300 level where we rest currently.

The $300 level also serves as “round number” or “psychological” resistance (or targets) so this is the level to watch in price for a potential pullback.

Should bullish sentiment shatter this level, I think it would mark an extreme turning point – particularly with Crude Oil and the S&P 500 shattering their same confluence resistance levels – which would likely shift the odds to favor a “New Bull Market” in in place in anticipation of a recovery in the broad economy to come in late 2009 or even early 2010.

For now, let’s watch these levels closely for clues of what’s likely ahead – one way or the other.

Corey Rosenbloom, CMT
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