Copper futures have rallied about 20% in the past month, reflecting growing optimism about an economic recovery, especially in China. The past week’s rally took it over January’s high at 166.50, and it has been consolidating for the past week. This consolidation has taken the form of a triangle as prices coil up. let’s look at it.Below is the chart . Note the series of lower highs and higher lows.This indicates that for now, neither the bulls nor the bears are willing to commit to moving prices, with the midpoint of the triangle around 167.50.As we are getting close to the apex, prices should be making a move soon.
It would be interesting to see another leg to the rally.Copper has been called “the commodity with a PhD in economics” and another rally could be an indicaion that the economic rally will get going.Last fall I predicted that the economic slowdown would bottom in the spring.My basis for this was that I assumed that lower mortgage rates and housing prices would meet with pent up housing demand in the spring to get housing back on its feet. As housing was a big part of what got us into this mess, it would make sense that it would lead us out. The fly in the ointment was the Obama administration’s confused message and inability to act decisively. This lack of action has caused indecision, and markets hate indecision.Maybe copper will tell us that the time for indecision is ending.
The copper futures chart-Triangle
.gif "Triangle in Copper Futures")
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