Copper Forecast Today: Attempts To Break Resistance (Chart)

(MENAFN- Daily Forex)

• The copper market, long known for its ability to forecast the overall economic outlook for the globe, has fired a shot across the bow of the sellers during the trading session on Thursday, breaking above the $5 level at one point.
• However, it's also worth noting that the market has pulled back to form a bit of a shooting star, so it's very possible that we may remain range bound.
• There are a couple of different ways to think about this, which I'll explore in this analysis.

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Think about this: you have massive profits in a trade involving copper, but you have the jobs number coming out of America in 12 hours. What would you do? You would more likely than not take profit, because you never know what the announcement will do to the market, as well as the inevitable lack of liquidity that will be happening at the same time.

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I think this is part of what happened during the trading session, but it is worth noting that the $5 level is resistant, and of course it has a certain amount of psychology attached to it as well. With that being the case, I think you have to recognize that the Friday close will be crucial for the copper market, because we can break above the top of the shooting star from the Thursday session, that is an extraordinarily strong signal. But what would this say about the economy?

It would say several things. First of all, it could say that the US dollar is shrinking again, because it is of course priced in US dollars. Secondly, it could give us an idea that the global economy is in much better shape than a lot of people have been postulating on television and global economic websites. This is normally the case, by the way. And thirdly, it would show that we just broke out of a $0.50 range in copper, and more likely than not we would eventually grind toward the highs near $5.37.

On the other hand, if copper does pull back from here serve falling, then I think we return to the overall consolidation range, but it is obvious to me that the buyers are a bit more aggressive, so I would be very cautious with a short position. Quite frankly, you can make an argument for buying copper again near the $4.75 level in that environment.

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