We’ve been seeing copper in the news lately, mainly with its recent breakdown and consolidation off a key support level.
Let’s take a look at the weekly frame then drill-down to daily chart levels to watch in both Copper and the related ETF JJC.
First, the Weekly Chart of Copper:
A quick glance of the current chart shows the simple $3.0 level as a longer-term key level. It’s not magical, it’s just a ’round number’ level where price has reversed in the past – including September and October 2011.
In addition to a pure price level, the 200 week SMA resides at $3.22 which is a level to watch in conjunction with $3.0.
The other quick thing to note on the Weekly chart is the bearish cross of the 20/50 EMAs which cluster about the $3.8 level, which happens to be another key price level to watch, as price has bounced three times from the $3.8 support (it may prove to be resistance in the future).
With the Weekly Chart structure above, let’s now drop to the Daily Chart to see the current levels to watch:
The Daily Chart gives us a bit more clarity about the key simple price levels to watch – it’s $3.0 for confluence support and the $3.9 area for upper resistance.
The immediate level for traders – especially those looking for a confirmation breakout trade to the upside – is the loose cluster from $3.5 (prior price swing highs along with the Upper Bollinger Band) to $3.6 (the falling 50d EMA).
A firm power-breakout above these resistance levels will likely be seen as a BUY signal, along with a “cover-shorts” signal.
Those will be key level to watch immediately – the confluence overhead resistance at $3.5 to $3.6 (which, if broken, targets $3.9) and the long-term critical support at $3.0.
Here are the corresponding price levels in the related Copper ETF – JJC:
A quick check-up shows us a similar structure:
Immediate resistance exists at $45 (price and upper Bollinger Band) and $46.50 (falling 50d EMA).
Above the $45/$46 resistance is the upper key target $51 level (a potential target to play for on a closing breakout above the $45 then $46.50 level) and beneath the current ‘range’ resistance is the critical support at $39.00 per share (double bottom).
Keep watching these levels along with any follow-through on any breakout that occurs… otherwise, without a breakthrough here, it would suggest the lower support may be re-tested.