December Copper, is another run upcoming?

November 23, 2016 8:17AM CST

All eyes have been focused on the recent run-up in the copper market over the past few weeks. But the real question is, is it time for a correction? All signs from a fundamental and technical perspective say not quite yet. Let’s think about this from a fundamental perspective for a minute. There is a clear perception that US infrastructure and increased Chinese demand is propping this market up to irrational levels. The continued draw in LME stocks has been killing any chances the bears have with the most recent report showing another draw. The chart below can illustrate my point.

Copper Monthly

Right now, the fundamentals all point to global growth and factories accelerating their production, more new homes being built, and infrastructure spending coming into play with a Trump Presidency. If you look at this from a technical perspective, I believe it’s a more simple way to play copper. The bottom line is that following a trend is the best way to trade in my opinion, and in this case any break below the most recent “run up trend” points to a sell with any close just below 2.50 as illustrated by the graph below. I believe you could add to your short position with a close below the 50% Fibonacci retracement at 2.40. If the copper market really falls apart from a breakdown in price it most likely finds heavy support at 2.30, which marks the 38% retracement mark, as well as several highs that have been posted at or below the March, April, and July months. There are a number of ways to play copper from options to futures or a combination of the two. To take advantage of this opportunity in copper, or any other commodity market please contact me directly at the trade desk.

Copper Daily

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