Copper’s many tangos
In the following charts below, we will highlight why copper looks interesting to us right now.
Firstly, the Copper Outright prices (orange) vs the Calendar spread (black). Copper calendar spread tend to move in-line with its outright prices, until major turning points, when the calendar spread leads the outright price movement. In February 2022, we observed the copper calendar spread making a significant move lower, with the outright prices following suit in April. With the calendar spread making a significant move higher now, is this what they call déjà vu?
Secondly, copper prices and the Chinese Yuan have a relatively high correlation as China is the world’s largest buyer of the metal, and by a significant margin. The recent weakness in the Yuan has led copper prices lower, but with the CNYUSD pair seemingly recovering now, could some strength in the Yuan lead the copper rally?
Thirdly, the Gold/Copper ratio generally trades within a pretty defined range, with out-of-range moves happening during major market events. The ratio’s recent high can be attributed to copper weakness compared with gold. With signs of the ratio retracing off the upper range, have we marked the end of this move? And is it time for copper to gain some ground against gold?
Looking at the price charts, we see copper trading near the significant long-term support level of 3.3. Previous attempts to break this support in July and September were both rejected.
On a shorter timeframe, we see a descending wedge pattern forming, which is generally considered a reversal pattern.
The same setup is also observed on the Micro Copper contract, which offers greater flexibility and precision in execution.
Copper’s interesting relationships with major currencies and commodities, allow us to analyze it from multiple angles. With some relationships at major inflection points now, we lean bullish on copper.
Entry at 3.44, stop at 3.1335. Target at 3.8320 and 4.0000 .
If you’re keen on understanding more about Copper and its many relationships, do check out our previous research piece: cmegroup.com/education/articles-and-reports/a-curious-case-of-dr-copper.html
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/gopro/
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
Firstly, the Copper Outright prices (orange) vs the Calendar spread (black). Copper calendar spread tend to move in-line with its outright prices, until major turning points, when the calendar spread leads the outright price movement. In February 2022, we observed the copper calendar spread making a significant move lower, with the outright prices following suit in April. With the calendar spread making a significant move higher now, is this what they call déjà vu?
Secondly, copper prices and the Chinese Yuan have a relatively high correlation as China is the world’s largest buyer of the metal, and by a significant margin. The recent weakness in the Yuan has led copper prices lower, but with the CNYUSD pair seemingly recovering now, could some strength in the Yuan lead the copper rally?
Thirdly, the Gold/Copper ratio generally trades within a pretty defined range, with out-of-range moves happening during major market events. The ratio’s recent high can be attributed to copper weakness compared with gold. With signs of the ratio retracing off the upper range, have we marked the end of this move? And is it time for copper to gain some ground against gold?
Looking at the price charts, we see copper trading near the significant long-term support level of 3.3. Previous attempts to break this support in July and September were both rejected.
On a shorter timeframe, we see a descending wedge pattern forming, which is generally considered a reversal pattern.
The same setup is also observed on the Micro Copper contract, which offers greater flexibility and precision in execution.
Copper’s interesting relationships with major currencies and commodities, allow us to analyze it from multiple angles. With some relationships at major inflection points now, we lean bullish on copper.
Entry at 3.44, stop at 3.1335. Target at 3.8320 and 4.0000 .
If you’re keen on understanding more about Copper and its many relationships, do check out our previous research piece: cmegroup.com/education/articles-and-reports/a-curious-case-of-dr-copper.html
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/gopro/
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
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