Wednesday, 28 March 2012

Dr Copper - an early summer high?

Copper is without question a great indicator of underlying economic growth. It has been a pretty volatile commodity over the last few years, lets take a look...

Copper, weekly cycle, 2yr historic

Copper is still way below the 2008 highs, although admittedly so are the main US and world Equity markets. The count I've noted is something to consider. We do have two very clear triangles (pink), with the first one breaking to the upside. Will this latest one do the same? I am guessing it does, and my target is $4.10/20 by June/July.

I believe that will make the peak of the current 5-wave up cycle that has lasted since October'2011.

Copper, weekly cycle, 8yr historic (bearish scenario)

On a much larger time view, Copper appears like it could be in a wedge. This is a particularly tricky one to project from. Clearly there are two key levels to watch, from which we could then assume a more general direction.

1. A move above $4.60 would be VERY bullish (with major implications for Gold/Silver/Oil)
2. A move below $3.00 would be VERY bearish, and support the deflationary theory that many still hold to.

For the Commodity/Economic bears, it is easily possible that Copper will bounce off the lower triangle support line around the $3.25 level near the end of 2012, and then put in a lower high, before the more dynamic and fierce move lower sometime in 2013.

Dr Copper will certainly be important to watch in the coming summer, I'll be sure to provide regular updates on this important base metal.