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Copper prices soared on Monday after weekend data from China to the highest level since August 2014. The move was also fueled by position taking ahead of China's 19th Communist Party Congress this week. Copper for December delivery closed up 3.4% at $3.2595 a pound on the Comex division of the New York Mercantile Exchange. Today we have seen prices consolidate after six straight sessions up. . On the London Metal Exchange, copper prices passed the psychological barrier of $7,000 a ton.

Copper Retraces 50% of ABC 2011-2015 Move

Copper Monthly 10 17 17

Other industrial metals have risen as Central Banks fuel optimism about the strength of the global economy as their rhetoric changes looking for inflation catalysts. Lead, nickel and aluminum all closed higher Monday, while tin was unchanged and zinc declined.

The monthly chart shows a slow move in three waves, A, B and C as marked from 2011 in a six-year bear market. We are at the 50% retracement of that move. Since Trump's election copper has rallied in seven months of choppy consolidation. The question is was that bear rally consolidating the previous rally and complete to go higher or this move a fourth wave of a larger decline?

Daily Cloud on Copper Support Structure

Copper Daily 10 17 17

Knowing the fibonacci probabilities and different time periods with ichimoku helps us here. Know the alternatives and with manic moves ablaze everywhere, seen equities lately it is important to have a technical perspective for alternatives.  Why, there are many alternative fundamental outcomes for copper economically and geopolitically.

The Shifting Political Sands of Copper

There are the obvious political headwinds with Xi in China and Trump in the U.S., not to mention Spain, Brexit and the Middle East. For copper the big ones are Chile and Indonesia at present. Indonesia is home to the Grasberg mine, which is about to have a price set for the government’s legislated purchase of a 51 percent interest.

Chile is the world's top copper producer and heading into Novemeber elections. A leading presidential candidate, center-left candidate Alejandro Guillier wants to overhaul the local mining sector. He is running on a 10-point plan for mining reforms. Changes include permits,  royalties and environmental impact procedures more streamlined for the mining sector.

There is one aspect that could really shake things up for copper. He wants to repeal the Copper Reserve Law whereby Chilean state copper miner Codelco is required to transfer a portion of profits each year to fund Chile’s armed forces.  The law  is also outside of the control of Chile’s parliament. Should it be repealed Codelco would be able to fund expansions and new project developments. Production would then increase, he is also wanting to do the same fr Lithium. 

Trade Smart

Knovawave @knovawave 


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