Last November, we provided and update on Copper futures, suggesting that price was ready to put in a small fourth-wave consolidation or rally.
We also suggested that the better trades during 2016 would be aligned with the larger Copper downtrend – a trend that shows signs of continuing, as pressure will likely mount on copper prices.
To summarize our earlier Elliott wave analysis, the big-picture pattern in copper appears to be an A-B-C formation that began in 2008. If so, then price is currently tracing the later parts of wave ‘C’. The internal structure of wave ‘C” should consist of five smaller waves, labeled [i]-[ii]-[iii]-[iv]-[v], and within that sequence wave [v] appears to be extending to develop its own five-wave pattern. Thus, we are looking for completion of the final downward move within the copper downtrend sequence of (i)-(ii)-(iii)-(iv)-(v).
The monthly chart below offers possible downward price target areas for wave (v) of [v] of ‘C’ near 1.80, 1.50, and 1.32. Those targets assume that the wave (iv) correction of recent months is complete. However, if wave (iv) continues in a sideways or upward pattern for several more months, then we may have to revise the downward targets slightly.
Copper Futures Prices – Monthly Chart
Note that a copper forecast including a continuing decline in copper prices is consistent with our upward forecast for the U.S. Dollar Index – that was posted here last month. We believe a rally in the Dollar may begin soon, or may have already begun last week. If a U.S. Dollar rally can continue into 2017, as we believe should happen, then copper’s decline could continue throughout most of that period. Either way, we’ll keep you posted on the copper downtrend.
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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
