Potential signal
I am a buyer here.
I am setting a stop loss at the 6.14 level, with a target of 6.49
Copper markets initially fell on Thursday but found support near the $6.25 level to turn things around and show signs of life. As we start to break to the upside, we are in fact trying to break out of a basing pattern that we have been in, and I do think eventually that happens. After all, there is a huge demand for copper around the world, and the supply is nowhere near where it needs to be to make that demand filled.
So, with this being the case, I like the idea of buying copper and I do think that eventually we go looking to the $6.50 level, possibly even higher than that. The 50-day EMA is down at the $6.05 level, and the $6 level is offering support as well.
With all of that, I think it is probably only a matter of time before we do see buyers on any dip anyways. And if we can get good news out of the Middle East, that'll drive down interest rates and traders will be more interested in buying some of these non-yielding assets.
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Long-Term Macro Demand and Interest Rate Dynamics
The demand for copper is strong for years, if not decades, going out. So, I think copper is continuing its move to the upside regardless of what happens. It's just that if interest rates were to start falling, that would help the situation.
The $6 level for me is a hard floor in this market. We'd be hard-pressed to break down below there, although I suppose anything is possible. If we did, then I would just look for another opportunity to buy later. That would probably accompany massive swings to the upside as far as interest rates are concerned.
But really, at this point in time, I think you've got a scenario where traders are going to continue to look at any opportunity to take advantage of cheap copper that they can. I would anticipate noisy trading, but there is so much of a fundamental reason for this market to go higher that I think it just makes sense sooner or later we go much higher.
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