Dr. Copper on the Road to Recovery

By | October 28, 2016

Copper has lost over half of its value in the last four years, but this year it has been attempting to consolidate in an effort to halt the decline.
The daily chart shows the consolidation as a period of lower highs and higher lows forming a symmetrical triangle or wedge pattern. This week the commodity price bounced sharply off the triangle support line to retest triangle resistance.
The MacD is making a bullish crossover and the relative strength index has crossed above its 21 period average and center line, both reflecting the improved momentum. Overall volume has spiked, the accumulation/distribution line has crossed above its signal average, and Chaikin money flow is moving into positive territory. Volume and money flow is supporting this week’s rally.
It is likely there may be a pullback before a breakout, but if the pattern is penetrated it projects a price target measured by taking the height of the triangle base and adding it to the breakout level. That would take the commodity price back up to the area of the weekly long term downtrend line.

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