Copper Continues To Look Weak Despite Recent Bounce
Anna Coulling | Aug 24, 2021 02:38PM ET
The daily chart for copper has some key volume price analysis lessons. As I suggested in a post several weeks ago, this commodity was looking weak.And so it has proved to be in the fullness of time. But what I want to focus on here is the price action in August and, in particular, over the last couple of weeks.
If we begin with the initial move away from the volume point of control, denoted with the yellow dashed line. Note the feeble attempts to rally around the $4.35 area with volume falling. The narrow-bodied candles, and wicks to their upper bodies, are surely not a sign of a strong market. And so it proved to be, with the price action developing into a classic waterfall, with widening spreads on rising volume.
In a falling market, this is what we always want to see, rising volume that confirms the big operators are selling heavily. This is a genuine move lower. The big operators then step in and buy around the $4.00 level, and the day closes with a nice deep wick to the lower body and a reversal the following day. Overlay these two candles and you have a strong hammer. However, notice yesterday’s volume. It is lower than the previous day, and simply becomes a pause point in a series of lower highs and lower lows in the downward path. This lack of significant volume is something we are also seeing in the ongoing bounce higher in the indices, which may run out of steam, too.
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