Anna Coulling
Add to Bookmarks

This reversal in sentiment from bullish to bearish was first signaled on the 10th May with the extreme candle at the top of the chart on ultra-high volume which has seen the price fall from $4.87 lbs to last week’s close at $4.32 lbs with the commodity trading lower in early trading as the new week gets underway at $4.26.

Charts from NinjaTrader and indicators from Quantum Trading

As we can see from the chart, the key level to the upside is at $4.34 lbs and is denoted with the red dashed line of the accumulation and distribution indicator. It is a level that has been tested repeatedly across 18 sessions (so far) resulting in copper congesting in a tight range as it attempts to break through this resistance. Indeed, one highly significant sign of weakness was the candle and volume of the 6th July with the deep wicker to the upper body and on very high volume. Note also the price action of Thursday and Friday last week. Here we have a market that is attempting to rally, but spreads have narrowed on declining volume, which is not a signal of strength, a fact confirmed this morning.

Know where the Market is headed? Take advantage now with 

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

To the downside, the key level as a potential platform of support is the red dashed line at $4.15 lbs again from the accumulation and distribution indicator which delivers these levels automatically. The indicator also gives us a clear visual indication of their strength as the line increases in thickness the more times it is tested.

So, in summary, it is a weak technical picture for copper and should the floor of $4.15 lbs be breached then we may see a return to the $4.0 lbs region. Moreover, given there is also a low volume node on the VPOC histogram at $4.12 it is an area where we can expect a fast fall in price.

By Anna Coulling

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker