Last week’s price action on the daily copper chart once again reflected the congestion phase for the base metal that has been building steadily since mid May, with the commodity trading in a relatively wide range. The ceiling is well defined in the $2.13/lb, a price area that has been tested several times in the past few weeks, most recently on the 6th June with the candle closing with a deep wick to the upper body, well above average volume, and a pivot high. The following day this weakness was duly confirmed with a wide spread down candle on ultra high volume and further confirming the bearish sentiment. The floor of support was duly tested in the $2.04/lb area and temporarily breached before Wednesday’s rally saw copper prices move higher, but closing well off the highs. This price action once again suggested weakness ahead, and validated by the deep upper wick to the candle and high volume. Thursday’s price action then confirmed the bearish sentiment once more with Friday closing on further weakness.
The longer term outlook for copper remains very bearish, and with the trend monitor remaining bright red, the question now is not if but when the current support region is breached with a move through the psychological $2.00/lb region then opening the way to a deeper move and down towards the $1.95/lb region in the longer term.
By Anna Coulling
Charts by NinjaTrader and indicators from Quantum Trading