An update on Copper ( $HG_F / $Copper )

Dr. Copper rug pull

Such beauty and power in a nuclear bomb blast. Photos like this almost make you forget the carnage going on below.  The Copper bomb hasn’t detonated yet, but the fuse has been armed and some folks are looking for their blast goggles just in case.

Last week I posted about the technical developments regarding copper’s recent moves. In that article, it was pointed out that the technical price objective based on the chart pattern was $2.60 / $2.65 on a measured move basis.

With fresh tariff-related news flow, Copper has made a substantial 3% down move overnight from yesterday’s close.  The chart below shows the approximate area where the futures are currently trading.   As you can see it is working its way down to an initial support level.

The next big support level shown on the weekly chart is a band between $2.40 and $2.47.  While the current sell off tells us that Dr. Copper is worried about the world economic outlook, a failure at $2.40 would have folks cleaning out their basement safe rooms and checking on their inventory of freeze dried staples.  We really don’t want to go there.

Chart School – PPO Momentum indicator

Notice the PPO momentum indicator in the second panel from the top. Look at how meaningful the zero line is.  The zero line acts as both support, resistance, and a toggle point between bearish and bullish mode. Notice how once Copper momentum dipped under the zero line in late Spring 2011, that zero line became powerful overhead resistance. It kept you in a bearish trade for over 5 years.  In mid 2016, it got you out and signaled that something different was happening.

Go look at the PPO on your favorite handful of stocks.  Look at the positioning of the PPO in relation to the zero line and what price is doing. At the very least it lets you know when to pay attention and that important things are happening, especially in longer time frames.

Thank you for reading! Hope it helps.

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