Monday, July 16, 2012

Copper futures (/HG) are poised to rally

Copper futures (/HG), a security that conforms to price channel modeling very nicely, may be on the verge of a rally. The contract may be about to break through the resistance side of a 7-month price channel; price at $3.51 or $3.52 would signify a break.

Adding conviction to the bullish side is that price action already withdrew slightly from this price channel resistance on Sunday evening (US time) and now knocks on the door again.

Bullish sentiment is strengthened by looking at the 200-period simple moving average (SMA; based on 4-hour candles). Price recently broke above this measure of sentiment, and the difference between current price and the SMA is near the 5-month high, which was set last week.

A method of expressing interest in copper is through JJC, the most liquid of the copper ETFs on the market.

/HG, 180 d 4h

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