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Talking Points
- Failure from long-term resistance picks up downside momentum
- Important turn window next week
Copper Breaks Key Support
Copper has broken through some important support levels this morning between 2.11 and 2.12. These include the median line of a pitchfork drawn from the late November low, the 50% retracement of the January - March advance and the trendline connecting the January and February lows. This break of key support comes on the heels of an important failure last month at the 2.33 38% retracement of the May - January decline and on a closing basis at the internal trendline connecting the August and September lows near 2.29. Are we seeing the longer-term downtrend reassert itself?
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It would seem so. If we close the day and week under 2.11 that would be further evidence that something more import is developing here on the downside. Also keep an eye on support between 2.07 – 2.08. If that breaks easily over the next few days we could see downside momentum pick up. Failure to sustain weakness under 2.11 over the next couple of days would raise the possibility the decline of the past few days was just a downside overshoot of a correction against the intermediate-term uptrend, but I would probably need to see traction back over 2.18 to give this thinking more credence. From a timing perspective, the second half of next week looks like the next important potential turn window.
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--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter @KKerrFX
