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The price of copper hit a new all-time high this week and briefly traded above the $500.00 level, however, the red metal has quickly corrected lower as the first big attack at $500.00 failed.
Copper is not moving higher as quickly as other metals, such as gold and Nickel due to demand issues. The sanctions on Russia have had a huge impact on minerals coming from Russia.
However, Russia is not a big copper supplier, hence why we have not sensed a big surge in copper price, and the rather modest test and rejection from the $500.00 level this week.
This does not mean that copper prices cannot rally sharply, although we probably need to see more fears over the demand side in copper, and precious metal such as gold and silver picking up steam to new highs.
I do believe another rally is coming in copper prices as the upcoming talks between Russia and the Ukraine looked doomed to fail if we look solely as some of Ukraine neutrality demands, which the Kremlin are unlikely to accept.
Technical analysis is still pointing towards the $600.00 level as a possible price target if the breakout above $500.00 takes hold. This is something that I have been expecting to happen for some time.
Sentiment towards copper has been the biggest risk in the market over recent months as the market turned heavily bullish towards the red metal. The herd has now flipped to neutral, which does not yet suggest more gains are indeed possible.
According to the ActivTrader platform some 73 percent of traders are bullish towards Copper. With the current bullish sentiment bias towards copper, I believe more short-term downside in the red metal seems the most likely scenario.
Copper Short-term Technical Analysis
The four-hour time frame shows that copper has formed a falling wedge pattern after being rejected from $500.00. These types of patterns are known to be bullish reversal patterns.
It is also noteworthy that the $500.00 resistance level is a big psychological barrier that needs to be broken to accelerate the breakout momentum in the red metal.
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Copper Medium-term Technical Analysis
The larger picture for copper prices remains extremely bullish due to the presence of a massive inverted head and shoulders pattern that holds a substantial upside price target.
A sustained break above the $490.00 is pointing to a price ramp towards the $600.00 level. Unless gold moves down to the $440.00 and breaks its 200-day MA, I have no doubts this pattern is going to blow to the upside.
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