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Copper price hit a fresh decade high yesterday as the red metal is benefitting from strong demand, as the US economic recovery picks up, and supply and demand issues come to the forefront.
On Monday, a supply disruption took place in Chile, after workers on a key Chilean Port that produces vast amount of copper called for strike action in response to Chilean President’s Sebastian Piner.
President Piner moved to stand in the way of a bill that would have allowed miners on the Chilean Port to make a third round of early withdrawals from their pension funds. This is significant for the copper market because Chile produces a quarter of the world’s copper output.
Market signs are also price positive for copper right now as the ongoing breakout takes place. A major Canadian bank said that they took a big loss as they were stopped out of their short copper trade this week.
Many analysts are noting that the ongoing supply/demand imbalance has pushed copper prices to their highest ever level in over ten years. Copper’s current all-time high comes in at $4.62.
Based on previous price behaviour commodities tend to go parabolic when they start to breakout above former all-time highs, particularly during so-called commodity super cycles. An approval of the Biden administration massive infrastructure spending bill could be the catalyst to turbo charge copper prices.
Sentiment towards copper is hinting that the pace of gains could start to slow. Some 55 percent of traders are bullish towards copper, which means that bullish sentiment has dropped during the recent rally.
We probably do need to see this metric turn bearish. Once the retail crowd turn bearish it could help propel copper much higher again and provoke a test of the $500.00 level.
Copper Short-term Technical Analysis
The four-hour time frame shows that an extremely large symmetrical triangle pattern has been activated after the price moved above the $437.00 level.
According to the overall size of this typically bullish price pattern copper could rally towards the $500.00 benchmark level.
The former yearly high, around $437.00 is now former key resistance turned key support for copper price in the short-term.
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Copper Medium-term Technical Analysis
The larger picture for copper prices continues to show a massive inverted head and shoulders pattern, which remains activated while the price trades above the $380.00 level.
According to the overall size of the bullish reversal pattern, copper prices could rise towards the $600.00 level over the medium to long-term.
It is possible that copper prices may not stop once the price crosses past $500.00. Typically, parabolic price moves over extend analysts price targets and even exceed pattern targets.
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