Mo Failure, Bullish Sentiment Reinforce Copper Top Threat

December 19, 2016 2:19AM CST

Fri afternoon and overnight's break below 30-Nov's 2.5505 initial counter-trend low confirms a bearish divergence in daily momentum that also confirms our broader peak/reversal count introduced in 29-Nov's Technical Blog .  This resumed weakness leaves 05-Dec's 2.7130 and 28-Nov's 2.7530 highs in its wake as the latest smaller- and larger-degree corrective highs that now serve as our new short- and longer-term parameters from which the risk of non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed.

Copper 240min

Copper Daily

The daily chart above shows the confirmed bearish divergence in momentum along with the prospect that the rally from 12-Sep's 2.0640 low is a complete 5-wave Elliott sequence.  COMBINED with the highest reading (84%) in our RJO Bullish Sentiment Index since Jan 2005 shown in the weekly log chart below the market presents a compelling case for a larger-degree correction or reversal lower as long as the market remains below our short-term risk parameter at 2.7130.

The extent and impulsiveness of Oct-Dec's rally is certainly not to be ignored and, we believe, still argues in favor of a major BASE/reversal of the secular bear market from Feb'11's 4.65 all-time high.  But interim corrections within such a major bull can be equally disruptive early the reversal process.

Copper Weekly

The monthly log scale chart shows the market's rejection thus far of the (2.7788) 50% retrace of the 5-year bear market from 4.65 to 1.9355 as well as the clear break of the 5-year downtrend.  But just as the 2011-to-2013 topping PROCESS included extensive interim corrective rebounds, so too may the current BASE/reversal process include extensive but interim corrective relapses.  In the current situation the 2.32-handle-area provided major resistance that, since broken, now serves as a major new support candidate.  A corrective setback between 15-Nov's 2.4260 (prior 4th-Wave) corrective low and this 2.32-area serves as an expected support candidate within what we suspect is a new major bull market.

These issues considered, a bearish policy remains advised ahead of further and possibly steep losses to the 2.42-to-2.32-range in the month or two ahead.  Strength above 2.7130 is required to threaten this count while a recovery above 28-Nov's 2.7530 will negate it, reinstate the new secular bull market and expose further and possibly steep gains thereafter.

Copper Monthly

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.