Similarly to the general commodity market, copper has been steadily climbing during the first quarter of 2019. Three months ago, the price of the industrial metal fell to $2.5281/lb. As of this writing, it is hovering around $2.9266 after reaching $2.9808 on the last day of March.
According to the media, copper’s rally can be attributed to China’s better than expected manufacturing data and the trade talks progress between the Asian country and the U.S.
But since it was the Elliott Wave principle, not the news, which warned us about a bullish reversal in copper prices several months ago, let’s apply it to XCUUSD’s 2-hour chart below and see what happens.
The chart above reveals that the structure of the surge from $2.5281 to $2.9808 is impulsive. It can be labeled 1-2-3-4-5, where the sub-waves of wave 3 and those of wave (iii) of 3 are visible, as well.
According to the theory, a three-wave pullback follows every impulse, before the larger trend can resume. Given that wave (1) seems to be complete, this means wave (2) can now be expected to drag copper prices down to ~$2.75 before the bulls return.
The exact depth of wave (2) remains unknown, though. However, as long as copper trades above $2.5281/lb, this is the count to rely on. Levels above the $3 mark are highly likely in the long-term once wave (3) begins.
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