Posted on May 11, 2023, 08:42 by Dave Toth

In 25-Apr’s Technical Webcast we discussed mid-to-late-Apr’s miserable performance that flipped the directional script from a bull market correction count to a broader peak/reversal threat.  With today’s definitive break below the past couple weeks’ 3.8165-to-3.8250-area support, and especially below 16-Mar’s key 3.8220 low detailed in the 240-min chart above and the daily log chart below, the market has confirmed a major peak/reversal process that has been unfolding since 18-Jan’s 4.3550 high.  The key by-products of this resumption of Jan-Mar’s downtrend are the market’s definition of smaller- and larger-degree corrective highs at 3.9595 and 4.1955, respectively, that now serve as our new short- and long-term parameters from which the risk of non-bullish decisions like long-covers and new bearish exposure can be objectively based and managed.

Former 3.82-handle-area support is considered new near-term resistance ahead of further and possibly protracted losses ahead that could span months or even quarters.

From a long-term perspective, what’s crucial about this week’s reaffirmation of this year’s reversal is that it reinforces a long-term bearish count that contends that the recovery attempt from Jul’22’s 3.1315 low to 18Jan23’s 4.3550 high is a 3-wave and thus corrective affair.  If correct and until negated by a recovery above 4.1955, this count calls for a resumption of 2022’s major downtrend to new lows below 3.1315 as part of a massive multi-quarter peak/reversal process that could indicate a weakening global economy given copper’s importance as an industrial metal.

These issues considered, a bearish policy remains advised for longer-term commercial players with a recovery above at least 3.9595 required to pare exposure to more conservative levels and commensurately larger-degree strength above 4.1955 required to negate this call altogether.  Shorter-term traders were advised to neutralize any cautious bullish exposure on a failure below 3.8165 and to reverse into a new bearish stance on that failure.  This bearish policy remains intact until/unless negated by a recovery above 3.9595.  In lieu of a recovery above at least 3.9595, further and possibly protracted losses that could span months are expected.