A Monumental Turning Point For Copper

Copper has been mired in a vicious bear market for more than five years. However, a monumental turning point may be at hand:

 

Copper (Weekly)

copper_weekly_11-1-2016

Since falling to the lowest levels since the depths of the 2008-2009 Global Financial Crisis in January of this year copper has formed a series of higher lows and lower highs. This price action has formed a 10-month symmetrical triangle and a huge volume-by-price bar near the $2.10 level, a level which copper has spent the last year traversing multiple times.

Something important is happening with copper; the reddish brown metal has risen for seven consecutive trading sessions on heavy volume and today it broke out from the 10-month symmetrical triangle. If the breakout holds on a weekly closing basis the measured move target will be $2.60+. A move above $2.30 would add extra significance to the rally because it would decisively snap the string of lower highs and confirm that a nascent uptrend is underway.

Bears can talk about copper inventory overhangs and a China economic meltdown all they want. Something big is happening in the copper chart and after a 5-year bear market which has reduced new exploration activity to a trickle, a monumental turning point may be at hand. The potential implications of a turn in the copper market for other markets and asset classes is also worth pondering; copper has historically been considered to be an important leading indicator of economic activity in the US and emerging markets (copper and EEM both bottomed in January 2016).

 

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