Copper Weekly Chart Descending Triangle

Dr Copper is a key economic indicator. There is 4 or 5 pounds of copper in the average car and about 50 pounds or more in a house. The automobile and housing sectors lead an economic recovery so it is easy to monitor the strength of the economy with copper. Copper is moving lower for the last four years forming the ominous red descending triangle. The baseline is 3.00 which is actually failing this morning. The two vertical sides of the triangle are 1.6 and 1.2 so the downside target zone is 1.4-1.8. Obviously, if copper slips under 2 the world is in a serious global recession and depression a la the Great Depression.

If the economy is as robust as economists and analysts claim, copper should be moving higher. The green lines show positive divergence for March of this year that bounces copper higher. Even though price in July 2014 did not match the December 2013 highs, the indicators are strong. Thus, higher prices above 3.3 would actually be expected but instead copper collapsed down to the psychological 3 level again. Since price is not below the prior low in March 2014 at 2.85-2.90, positive divergence cannot exist. Copper is in a sideways vibe through the purple channel at 2.85-3.30.

If the 2.85 level fails, copper and world markets and the global economy are all going down the rabbit hole into a worldwide deflation. Price is below the moving averages (blue dots) so a mean reversion would be expected (price moves higher). Watch copper going forward. The triangle ends as the year ends. So before 2015 arrives, copper would have either broken out above the upper trend line to nullify the descending triangle and signal a stronger economy and happy times ahead for 2015, or, copper would have collapsed through 3.00 and 2.85 and we are all heading down the rabbit hole together. As they said in the 1930's, "hey buddy, can you spare a dime?" This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 6:37 AM: Copper drops to 2.96 losing -1.6% this morning.