Copper pulled back from the 2023 high of 4.400 to test a strong downside resistance which was broken to the upside of 3.9245. A break below this level could lead to a downside reversal and a test of 3.8000. A bounce from here is required for the upside extension and a test of 4.6000 higher.
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On the weekly Copper chart, we see an upside channel forming with the strong support of 3.9245 being tested. As we saw from the monthly chart only a confirmed break below this level at this stage would invalidate the upside reversal and an extension. Now the most important levels in the following weeks are 3.9245 followed by 3.8000 on the downside and 4.1650 on the upside.
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As the famous trader says…
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
Warren Buffett
How to trade this?
It is obvious that for Q1 2023, we have this upside resistance of 4.1600 which should be broken for an upside continuation. This means that now long trade entries have some advantage over short trade entries as the overall trend is still uptrend. You should open a long trade, not so big in size with a close stop loss order just below 3.9000 to target 4.2000. The risk to reward on this trade is higher than 2 and the timing of the trade could be Monday NY session or Tuesday European session.
