Metals are the biggest movers across futures markets overnight, coming under pressure from an extension of gains in the dollar (metals are transacted in dollars so when the currency appreciates, consumers generally demand lower product prices). At times the crowd’s panic can present a buying opportunity and the chart of COMEX copper suggests that’s the case.
BREAKOUT STILL GOOD
Copper broke out from a double bottom formation in early May, as the April labor report and upward revisions to jobs growth in prior months boosted sentiment toward growth. There isn’t any evidence of that move being over. The drop in copper overnight and yesterday brought it back into the area of the double bottom but doesn’t threaten the bullish implications of the breakout. The measured move (adding the height of the pattern to the top of it) is 3.5130.
TRADING
Those who aren’t able to trade futures can look at JJC (iPath Dow Jones UBS Copper Total Return Sub-Index ETF). The best tactic is to keep your position size small initially to contain risk while allowing a looser stop loss that gives the trade room to breathe. The position could be added to if the trend proves itself.
= = =
