What looked like a possible bullish breakout devolved today into a trap as Copper buyers failed to hold the breakout level.
Let’s update our chart of Copper – and ETF JJC – and plan where were go from here:
Similar to Crude Oil, Copper fell through the end of 2014 and at the beginning of 2015, though a positive divergence developed at the lows.
A spike reversal took price all the way again like oil – to the falling 50 day EMA (blue).
Copper prices – seen here with the @HG futures contract – initially broke the level into $2.640 but soon fell back under the pivot point to trigger a possible Bull Trap.
Note the $2.6000 level as the short-term bull/bear pivot level.
A break above $2.7000 suggests price can quickly trade toward $2.8000 (bullish scenario) while a break under $2.6000 suggests the selling pressure will return, taking price toward $2.4500 and perhaps lower.
The situation is the same in the related ETF symbol JJC:
The logic is the same, only the pivot and target levels are different.
Focus on $32.00 as the upper pivot (along with $32.50) and then the $31.50 level as the lower pivot.
A trigger break lower – especially one that breaks under $31.00 – suggests a sell signal down toward $30 and $29.
Otherwise, a resumption of the breakout into the green zone triggers above $32.50.
Keep watching these levels from within the neutral point where we are now.
For more daily updates from Corey, visit his blog at Afraid to Trade.com.