Another False Dawn For Doctor Copper
Anna Coulling | Oct 27, 2021 10:19AM ET
It’s been another false dawn for copper, which continues to remain restricted to trading in a narrow range as each rally falters and weakens before reversing on the daily chart. It is a pattern we have seen repeated since May, with the volume point of control remaining the focus.
The breakaway from the VPOC promised much, with both the candles and volume of Oct. 13 and Oct. 14 looking bullish. Here, we had widespread up candles on excellent volume with no wicks to top or bottom. The price action of Oct. 15 then followed on equally strong volume, but with a wick to the upper body suggesting some short-term weakness. The following day this was confirmed, with the well-defined shooting star of Oct. 18 confirming the prior day’s signal. This was repeated on Oct. 19, with another strong signal of weakness on comparable volume. The price action on Oct. 20 then hinted at possible support before this was snuffed out the following day with a widespread down candle associated with good volume.
A weak attempt to rally has once again has been snuffed out, as bearish sentiment drives copper lower, with further bearish pressure today as the price moves towards the $4.40 lbs area. So the question now is where next for the price of copper?
The short answer is back to the volume point of control at $4.28 lbs, denoted with the yellow dashed line. There is a potential pause and support at the price-based level of $4.34 lbs denoted with the red dashed line of the accumulation and distribution indicator.
Moving to the weekly chart, this is interesting for a different reason. Once again it reveals the importance of considering different timeframes in any analysis. The important candle here is last week’s price action extending from the VPOC at $4.3lbs through to $4.70 lbs and beyond, but look at the volume. Is price and volume in agreement or disagreement?
The short answer is the latter, particularly when we consider the volume associated with the price action of the final week in February. The volume is significantly more, almost double, yet the price action is half. This gives us a benchmark to consider that sends a clear signal that last week’s move is a trap as the big operators are not participating. Hence, we can expect a reversal in due course, which is what we are witnessing now. It is an example of Wyckoff’s third law in action. This simple analysis confirms what we are now seeing for copper on the daily timeframe.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.