Written by Rob Tovell

The copper market is getting excited! After a drop of +50% since it peaked in 2011, copper has basically gone only one way, i.e. down (just not in a straight line).

Now, copper is showing a similar setup as gold two months ago, right before gold rose sharply higher. Copper’s chart setup makes it very interesting, because sentiment is so negative nowadays: economic growth is slowing (driven by China), the interest rate hike was followed by talks about coming negative interest rates, companies are reporting rather poor earnings, manufacturing data are not very encouraging, … The list is endless, so everyone and his uncle is convinced that copper can only go one direction, i.e. down. That’s exactly the moment when magic happens in markets, as prices tend to move in the opposite direction, but that’s only abenefit for the sharpest investors as 99% has given up already.

The copper market, however, given all negativity in terms of sentiment, seems to be putting in a very significant bottom pattern, right in front of our eyes. Let’s revise the charts.

This chart comes from the video (embedded below), in which a couple of things stand out:

  • The left bottom chart shows that point C, a lower low, did not have much follow through, so there is sufficient buying at that price level which confirms the scenario of a bottom.
  • Point E seems to be holding higher than C.
  • The grey moving average on the larger chart is the 60 day moving average, which is more important than the widely followed 50 DMA, and it shows signs of flattening, a very bullish signal, certainly if it will transition into a rising pattern.

    • copper_18_february_2016

    Rob Tovell’s first target for spot copper is $2.20. There is not a clear buy signal yet, so a little bit of patience is required.

    Watch the video for more details on the price of copper.

    As spot copper seems to be bottoming, the largest copper miner is setting up for an even more interesting move. Freeport-McMoRan (symbol FCX) had a fantastic week, as its share price rose strongly above its important 60 day moving average (see the yellow line in below video). FCX is seemingly in the process of flattening out its 60 DMA, transitioning from a downtrend. Its 10 DMA (blue line in below video) has already transitioned to an uptrend, and is about to cross over its 60 DMA

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