Daily September High Grade Copper

Comex High Grade Copper Futures Analysis – June 28, 2013

September High Grade Copper futures rallied on Friday but speculators couldn’t trigger an upside breakout and short-sellers refused to budge. With prices at their lowest levels in almost three years, it seems like just a matter of time before the buying will overcome the selling.

Bullish traders are waiting for some clarity from the Fed. Since June 19, the market has dropped considerably on the thought the central bank would begin tapering. Some traders had built in a September start date. Late in the week, a few Fed officials said investors had it all wrong. They claimed the Fed is not watching a calendar, but rather economic growth. This helped put in the bottom and stabilize prices.

Also helping the market bottom was a comment from a People’s Bank of China official. At the start of the week, the Chinese money markets were in disarray. Some traders felt it was on the brink of a credit crisis. Since China demands about 40% of the world’s copper, many traders believed demand would fall off and priced the market accordingly. A central bank official then calmed the markets by stating that the situation was under control and that “reasonable rates” would be attained.

Daily September High Grade Copper
Daily September High Grade Copper

So now that prices have stopped falling and the markets have stabilized, traders are looking for a catalyst to drive prices higher. The technical picture looks friendly but it is going to take an event to force short sellers out of the market. This event may be an economic report or another comment from a Fed official.

The base being built in copper is either going to lead to a strong counter-trend move or a continuation of the trend. If the market believes the Fed will refrain from making any changes in its stimulus program, then look for a breakout to the upside. If traders believe the Fed will begin tapering its stimulus as early as September, then look for a resumption of the downtrend.

There is nothing in the chart pattern which suggests an impending change in trend, but the current chart pattern indicates the market could be ripe for a solid retracement rally back to at least 3.1990. A lot depends on whether the market can sustain a move through the downtrending Gann angle at 3.0725.

The closing price reversal bottom at 2.9855 is helping to hold the market in place, but the buying has to overcome the selling or something has to happen to encourage the stubborn shorts to begin covering their positions. 

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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