COPPER Daily Chart; Head and Shoulders (H&S) Pattern

The party in the stock market continues. Ditto copper. Investors and traders believe the global economy will go like gangbusters. China data is strong but the CCP are filthy liars and you cannot trust what they say. Peru, Bolivia and other South American regions in the copper fields have been hit hard by covid and labor strikes sending prices higher.

The maroon lines show the overbot conditions, rising wedge, universal neggie d, upper band violation and price extended above the moving averages requiring a mean reversion, all these tools are bearish and voila, the negative divergence smackdown occurs (maroon arrow). Price staggers sideways, like a drunk in Times Square on Saturday night, and forms a head and shoulders (H&S) pattern. The touch of the neckline over the last few days and bounce higher now forms the right shoulder. The neck is 3.50. The top of the head is at 3.70 so that is 0.20 difference and 3.30 would be the downside target if the 3.50 level gives way.

The 3.20-ish level is strong support where the two blue lines are at and the 150-day MA is coming up to form a confluence with this 3.20-3.30 potential landing zone. The indicators are stumbling sideways and not telling much. The lower band is violated so the middle band at 3.61 and upper band at 3.70 are on the table. Price may come up to kiss the middle band, which is also the 20-day MA at 3.61, and then fail back to the neckline at 3.50, then fail from there.

Housing and automobile industries are the biggest users of copper. There are lots of electric motors nowadays and they all use copper windings. Your house is full of copper pipes and the appliances and electrical systems employ copper components. A slump in copper means housing and autos are softening. Joy in copper means people are working, the economy is going great, and people are spending money on houses and cars. That is why copper is called 'Doctor Copper', it is the 'metal that has a PhD in economics'.

The copper weekly chart is topped out with negative divergence like the S&P 500 so they both should begin a multi-week down move. Watch to see when the neckline breaks.

On the top side, watch 3.61. If that is taken out price may want to recheck the top at 3.70. Below 3.50 and it is likely over for copper for the next month or two. SCCO, COPX, FCX are the same basic chart. Keystone is not playing in the copper arena long or short right now. Lots of traders made a bundle on Freeport-McMoRan but they would be smart to ring the register and git outta Dodge, git while the gittin's is good. 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.