COPPER (US$) – HIGHER TARGET
Trend: Short term up. Medium term sideways. Long term up.
Strategy: Traders buy for more follow through.
The copper price has formed an inverse head and shoulders pattern (as labelled). It’s a bullish chart pattern. It’s broken out above line 1 (the “neckline”) to confirm that pattern. It’s pointing to a higher target.
The only concern is that the short-term stochastic oscillator (on top) is overbought; but it can remain overbought in a strong trend (refer to February/March 2010).
Traders buy, ideally, on a minor pullback – eg, to 6850 or lower (the price at the time of writing was 6990).
The minimum upside target is 7550, measured as the height of the inverse head and shoulders projected up. Take most profits there but leave some, with a tight stop-loss, such as a breaking of its prior two-day low to allow for any further upside thereafter.
Place your initial stop-loss at a closing price below 6620 (spot price).