In the last 4 weeks copper prices have declined over 30 cents dragging prices to their lowest level in 3 ½ months. Prices rose steadily after bottoming in mid-November but in just over 4 weeks those gains were erased. As of this post we are completing 61.8% Fibonacci retracement and penetrating a trend line that has held since August 2012.
I bring this up not so much as a trading opportunity but for traders to recognize that this is a grim development. The name give to this commodity by a number of traders is "Dr Copper" as it is viewed as an overall barometer of the global economy. With prices shedding 8% in such a short time frame it should serve as a red flag and force investors to question the validity of global growth.
If we see $3.40 penetrated in the coming weeks on this contract this should lead to a further 5-7% decline in my opinion. I find it difficult to imagine much more upside in securities in an environment that copper would decline at this pace. As for a trade I typically do not trade copper for clients because the extreme volatility. Currently I think prices could move 15-20 cents in either direction so I prefer to use copper as a gauge on how I should be positioning clients in other markets.
To discuss in more detail this chart or any other you can reach me at: email@example.com or 954-929-9997
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific's investor's needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions ("Forex") before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.