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A technical look at copper
Summary: Technical analysis of the weekly copper chart shows downside risks.
Following on from today's Morning Call, in which we discussed the $255 level as significant support in copper, we expand our analysis to the broader technical picture as seen on the weekly chart.
Essentially, the $255 support area is key because it represents the neckline of a shoulder-head-shoulder formation. The head is oddly shaped, and almost resembles a double or triple head, but this is a clear enough shoulder-head-shoulder formation nonetheless.
If we see a close below the neckline, which marginally slopes upward, it could fuel a sell-off that could take copper down to around $210. I would, however, wait for a close below the $255 level illustrated by the blue horizontal line.
That level has been tested a couple of times and seems to be quite strong.
(Note: horizontal lines are always stronger support/resistance levels than up/downwards sloping trendlines.)
Essentially, the $255 support area is key because it represents the neckline of a shoulder-head-shoulder formation. The head is oddly shaped, and almost resembles a double or triple head, but this is a clear enough shoulder-head-shoulder formation nonetheless.
If we see a close below the neckline, which marginally slopes upward, it could fuel a sell-off that could take copper down to around $210. I would, however, wait for a close below the $255 level illustrated by the blue horizontal line.
That level has been tested a couple of times and seems to be quite strong.
(Note: horizontal lines are always stronger support/resistance levels than up/downwards sloping trendlines.)
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