Markets

Is copper still even tradable at these levels?

Market contrarians enjoy seeing so many analysts and investors shift to one side of the aisle — as they currently are in commodities — in hopes of a correction ahead.

But with so many bulls out there, where should everyday traders look to put money to work in copper?

At the moment, many of the commodities like copper and gold are trading not only on fundamentals but also on technical factors — which can be confusing for some looking for guidance on where prices are heading.

Even with money flowing out of emerging markets and into developed markets, the technical story remains a factor for commodities.

On that level, copper has been in a bullish uptrend for the last year, barring a two-month consolidation from late April to mid-June:

Since June, copper has headed upward to a recent high of $4.6375 per pound. The trend is your friend until it bends – which means that since each time prices have pulled back towards the trend lines, it has created a good buying opportunity.

Currently, the 50-day trend is down around $4.31 a pound. Besides the trend line, other technicals such as the 100- and 200-day long-term averages are still signaling upward price movement.

Supply and demand is still strong and as developed and emerging markets improve, demand for copper will only grow.

Market history has shown that when the majority of traders are extremely bullish or bearish in a market or market sector, there is a good possibility a major trend change is coming. This sentiment is the case for the raw commodity market sector, which is enjoying an unprecedented bull run.

Meanwhile, expect more action ahead in copper-linked funds like JJC (quote) and COPX(quote) on the futures and miners side, respectively. Again, buying opportunities for divergences from the trend line.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.