Daily September High Grade Copper

Comex High Grade Copper Futures Analysis – June 27, 2013

September High Grade Copper futures are forming a support base and could be ripe for a breakout to the upside. After experiencing a prolonged sell-off from the June 5 top at 3.4125, the market has stabilized this week, even posting a potentially bullish closing price reversal bottom at 2.9855 on June 25.

The key to the breakout will be sustaining a move through a downtrending Gann angle at 3.0925. Not only will a move through this level confirm the reversal bottom, but it will also put the market on the bullish side of a downtrending angle that has controlled the direction of the market for 16 trading days.

The current range is 3.4125 to 2.9855. A sustained break out could trigger an eventual move into the retracement zone created by this range. This zone at 3.1990 to 3.2494 is the main upside target.

Fundamentally, the market has stabilized since China decided to fix its credit crisis problem. Earlier in the week, investors were questioning its potential impact on demand which accounts for almost 40 percent of global copper consumption.

Daily September High Grade Copper
Daily September High Grade Copper

Also providing some support is the perception that U.S. and Euro Zone central banks will not rush into curtailing their current stimulus programs. Earlier on Thursday, the New York Federal Reserve President actually surprised traders by stating that investors were “out of sync” with the economy and the Fed. This may have been a clue that the Fed is in no hurry to begin tapering its aggressive stimulus program.

The thought of the Fed holding off from making any changes is helping to pressure interest rates and appears to be the catalyst behind the latest rally in the stock indices. The more investors begin to believe the Fed will wait to make any changes to its stimulus package, the greater the chance of a near-term rally in copper.

It is suggested that short traders bring down protective stops or begin lightening up at current levels. Counter-trend traders and bottom-pickers may begin to big up activity if stocks and bonds continue to rise. A drop in the dollar should also make copper more attractive to foreign traders. 

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.

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