Originally published by AxiTrader
Copper rallied strongly from around $2.53 in late June to a peak in early September around $3.17 a pound for a gain of 25%.
The move was catalysed initially by traders reacting to news that China was moving toward restricting the importation of scrap. Questions of inventory levels and the resilience of the Chinese economy in the face of what many thought would be a slow down then fed the buying in what was a generalised run higher in global metal markets.
But, as with any market that runs sharply higher in such a relatively short space of time copper longs were vulnerable both to their own weight and any negative news.
To that end, a slew of weaker data from China and very long speculative market - not to mention my own system - signalled a pullback was in the offing.
And over the past two week's copper has fallen to last night's low of $2.935 - almost perfectly satisfying both the 38.2% retracement of the June-September rally and the uptrend channel of that rally.
This $3.93 level was the one I had been writing about recently as the target. And it is the one that - as the 38.2% retracement level - is a simple garden variety retracement level.
That's the type of retracement we see in many markets, over many time frames, and on many occasions. So, on that basis, the first leg is done and copper remains in an uptrend.
If $2.93 breaks then the next target is $2.85/6 and $2.78 below that.
Have a great day's trading.