The copper market in July established new highs and created stable corrective movements afterwards. At the beginning of the month, the market broke June’s high at 7,773, dynamically moving upwards. The next couple of weeks in July brought depreciation of copper, which seemed to be a corrective movement. July’s high reached 8,280. A little bit lower than the April 2007 high at 8,363. Due to this fact, the mentioned correction should have not been a surprise, since it is a form of stabilization before attacking the mentioned resistance level.
July’s declines were in the form of a running correction (Pic. 1 ABC), which surprised with geometrically ideal relations between the length of each wave (Pic.1). Additionally, those declines reached a consensus in a not coincidental place in relation to previous increases. June’s high at 7,773 became the support level; the mechanism of resistance becoming the support level worked ideally. Also, important were the geometrical retracements of the increasing waves from the last two months.
The market achieved a 38.2% retracement of the last two months’ increase movements (Pic.1, line YZ) followed by the 41.4% and 50.0% retracements of shorter increase sections (Pic.1). In effect, at the 7,783 price level, a double bottom price formation was formed, additionally supported by a pro-increase hammer candlestick formation shown on the H4 interval (Pic.1). In the last couple of days in July, the market bounced back up, which can be the beginning of next increase swings. It has to be said that the increase from the last two months is in the range of a stable upward trend, whose bottom limit covers the six-month upward trend line (Pic.2). Exceptionally, the market is supported by this line; that is why its eventual negation could be an important signal for bigger declines. Nevertheless, the current scenario forecasts further increases, for which August’s goal will be the negation of April’s high at 8,363 and a migration towards highs from last year on the level of 8,994.
Rys. 1
Rys. 2
Izabela Kozakiewicz
izabela.kozakiewicz@xtb.pl