Rebound in Copper Returns Focus On 76.4% Resistance

The Commodity Specialist view - Early this year the prior steady uptrend from a late 2008 low was seen to falter at a key Fibonacci level. After an initial sell-off a strong bounce has unnerved the bears - there is still scope for a resumption of weakness, but the market is at a critical stage.

• COPPER – MONTHLY CONTINUATION CHART: In late 2008 support was seen close to a long term 76.4% pullback level. Subsequent recovery saw a test of the 76.4% retracement, with Jan producing a type of Key Reversal Month. While the Jan high stays intact this negative signal remains valid – the current strong corrective bounce is not uncommon when a trend is in process of turning.
• COPPER DAILY CHART – MAY-10: The 76.4% bounce level on the daily chart was eroded after s/term resistance. But while the 3.5500 early Jan high remains in place there is still scope for a bear scenario to unfold, keeping in mind the Jan reversal month. At this stage a drop back through the 3.1600 support area would be an encouraging sign. Meanwhile we must await developments.

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