Trade Opportunities – High Grade Copper Futures – July 2016 Expiry Contract

In the chart above it is obvious that High Grade Copper futures has been bearish for a number of years. Mid-January of this year it made a significant low at 1.9590. It rallied 18.95% from that low all the way up to 2.3290. It has since retraced 78.6% (a Fibonacci harmonic level) from that high. If the low that was made in January holds that could signal the end of the bear market move Copper or at the very least a corrective move up to 2.395. We believe that Copper might be poised to rally from current price levels. The next chart is an expanded view of the boxed area in the chart above.

In this next chart we zoomed in for a closer view of the recent price action. The 1^st impulse move that ended on February 4^th stopped at what would become 50% of the March 18^th high. Since then we have seen an ABC pattern (labeled in the chart) where the distance from the March 18^th high down to pivot point A equals the distance from Point B to Point C. Additionally, the point C low is exactly 78.6% of the low to January to March range. We have volatility based support at 2.035. The point of control (POC) price sits at 2.097 as of May 26^th. One standard deviation on either side of the POC is 1.978 and 2.217. We have two natural trend lines that intersected at the low made on May 19^th. A cycle timeline is scheduled for June 17^th. Over the past few years, Copper has exhibited a strong inverse correlation to the US Dollar. Since the last Federal Open Market Committee (FOMC) meeting there has been wide spread speculation about whether or not the FED will raise rate at the next meeting. Raising rate would probably strengthen the US Dollar and if rates were to remain unchanged the recent US Dollar rally would potentially come to a halt. The next FOMC meeting is scheduled for June 14-15 which happens to fall within a few days of our cycle timeline. The US Dollar is currently in an overbought position according to the stochastic indicator. Pressure on the Greenback could lead to a lift in Copper prices.