Copper bears threaten long term bull triangle

Earlier this year saw a long term bull triangle complete. Our initial upside target was met, but subsequent action has been uninspired – and now, a recent failure of key support threatens the very fabric of the triangle formation. The Commodity Trader’s view:

• WEEKLY CHART – CONTINUATION: The bull break in Feb completed a large bullish triangle pattern, then nicely met our equality target in May (‘238.50-379.50’ upmove measured off 285.00 Dec-07 low). But the pattern implied much better upside potential over time. There is further s/term downside risk (see below), and failure of the triangle’s underside around 320 would completely negate the pattern.
• DAILY CHART – SEP-08: Failure to hold above the 400.00 level was followed by a slump back to the support line. This week’s failure of that line and 351.00 12-Jun low confirms the bears in control. First target 320.00-315.00 area, which includes a 76.4% retracement and 1.618 swing off prior 351.00-408.00 upleg. This coincides nicely with key support on the weekly chart. S/term support may well emerge from 338.40 15-Jan high/61.8% area, but recovery back above 375.50 would be needed to provide bulls with fresh hope.

Last week we looked at Natural Gas (Sep) and key 76.4% support which was currently under test. This support failed, although signals from the oversold daily RSI still hint at a recovery attempt soon. A rally/close back above the 9.60 04-Aug high would now provide an initial bull signal. Philip Allwright Mark Sturdy Seven Days Ahead [For the complete and illustrated version of this and future Updates be sure to sign up at www.sevendaysahead.com]