The monthly chart shows that Copper is testing the strong support/downside resistance of 3.6370. A bounce from this level is required for an extension higher to the critical upside long-term resistance of 6.5000.
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The Weekly Copper chart reveals a strong uptrend triangle support of 3.6370. This is the first strong line of defense for the existing uptrend supported by a rising uptrend line and a horizontal support line. This zone should hold for the extension higher. A break below 3.6370 would lead to a complete downside reversal and a bounce from this ongoing zone will lead to another test of 4.6500.
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As the famous trader says…
” When I get hurt in the market, I get the hell out. It doesn’t matter at all where the market is trading. I just get out, because I believe that once you’re hurt in the market, your decisions are going to be far less objective than they are when you’re doing well… If you stick around when the market is severely against you, sooner or later they are going to carry you out.”Randy McKay
How to trade this?
It is a fact that a strong upside support for Q3 is 3.6370 and we have seen a bounce from it so far but we need confirmation. If we get a confirmed bounce from 3.7630 we could see an extension higher to key long-term resistance 4.6500. A break below this level would mean a complete turnaround. Near-term, long-trade entries have a higher probability of success. There is a possibility of long trade entry and short trade here. We can open the long trade here with a bit of risk and stop the loss below 3.6370 and the short trade if we get stopped from the long trade.
