Copper Correction Complete? Silver Next? | RJO Futures

May 11, 2017 8:24AM CDT


At a minimum, the market's failure overnight to sustain recent losses below our short-term risk parameter at 2.5470 confirms a bullish divergence in short-term momentum and identifies Mon's 2.4725 low as the END of the decline from 01-May's 2.6945 high.  This defines that 2.4725 low as our new short-term risk parameter the market is now obligated to break to reinstate a broader bearish count and from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.

At a maximum this mo failure could have completed a major correction from 13-Feb's 2.8230 high and has re-exposed what could be the new secular bull market from Jan'16's 1.9355 low.

Copper 240 min Chart

Copper Daily Chart

Way back in 22-Mar's Technical Blog we speculated that a larger-degree correction could target the 2.48-to-2.45-range marked by the (2.4809) 38.2% retrace of Jun'16 - Feb-17's 2.0130 - 2.8230 rally shown in the weekly log chart below and Dec'16's 2.4480 4th-Wave corrective low of lesser degree.  Combined with what looks to be only a 3-wave decline from 13-Feb's 2.9230 as labeled in the daily chart above and a return to more neutral levels in market sentiment that won't inhibit a move in either direction, we must acknowledge the prospect that today's admittedly short-term momentum failure could morph into a more extensive move higher, including a resumption of the 16-month uptrend to new highs above 2.8230.

Copper Weekly Chart

Indeed, only a glance at the weekly log chart above and monthly log chart below is needed to see that the very long-term trend is copper prices is up and that the past three months' sell-off attempt is only a corrective hiccup in this trend.  Commensurately larger-degree strength above 01-May's 2.6945 larger-degree corrective high and key risk parameter remains required to CONFIRM Feb-May's decline from 2.8230 to 2.4725 as a 3-wave and thus corrective affair ahead of a resumption of the 16-month bull.  But until and unless this market fails below 2.4725, the odds of such a broader bullish count have increased as a result of overnight's bullish divergence in short-term mo.

These issues considered, shorter-term traders have been advised to move to a neutral/sideline position while longer-term players are advised to pare bearish exposure to more conservative levels and jettison the position altogether above 2.6945.  Needless to say a relapse below 2.4725 will negate this call, reinstate the 3-month downtrend and expose further and possibly steep losses thereafter.

Copper Monthly Chart



As a result of Tue's continuation of the the past month's relative meltdown, the 240-min chart below shows that the market has identified last Fri's 16.53 as the latest smaller-degree corrective high the market is now required to sustain losses below to maintain a more immediate bearish count.  Its failure to do so will confirm a bullish divergence in momentum, end the decline from 17-Apr's 18.655 high and expose at least a correction higher, and possibly a major reversal.

Silver 240 min Chart

Silver Daily Chart

This tight but objective risk parameter may come in handy given the market's proximity to the extreme lower recesses of the 5-month range bounded by 20Dec16's 15.675 low shown in the daily chart above and weekly log chart below.  Along with a relatively low 36% reading in the Bullish Consensus ( measure of market sentiment it's not hard to find base/reversal-threat factors and conditions.

These issues considered, traders are advised to pare bearish exposure to more conservative levels at-the-market (16.375) and jettison the exposure altogether on the immediate recovery above 16.53.  Subsequent setback attempts after a 16.53+ breakout would then be advised to be approached as corrective buying opportunities with a failure below Tue's 16.06 low required to negate that call.

Silver Weekly Chart

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