close icon

Copper Facing a Correction Within Uptrend

The price of copper climbed to 2.9154 yesterday as it continues the impressive recovery from the low at 1.9322 in January, 2016. Copper prices are vitally important not only to mining companies like Freeport-McMoran, but to the world economy, as well. It is true the metal has gained over 50% in value in just a year and a half, but even the strongest recoveries are interrupted by a correction from time to time. Elliott Wave analysis of the daily price chart of copper would help us find out if another one should be expected soon.
copper elliott wave analysis
The daily chart shows XCUUSD‘s entire rally since January 2016. As visible, it forms a textbook five-wave impulse pattern, labeled as wave I/A, whose wave (5) is still under construction. The sub-waves of waves (3) and 3 are also easy to recognize. This price pattern means two things. First, that copper has officially reversed its downtrend and is now pointing north in the long-term. And second, since the theory postulates that every impulse is followed by a three-wave correction in the other direction, this chart suggests we should get ready for a noteworthy pullback in wave II/B. Wave II/B is supposed to drag the price of copper down to the support area of wave (4), which means the bears could re-visit 2.5000, before the 5-3 wave cycle is complete and the uptrend could resume. In any case, new lows below 1.9300 are highly unlikely. And while this count suggests joining the bulls now is a risky endeavor, trying to pick the top and shorting copper could prove to be a very costly mistake, if the market chooses the following alternative count.

copper elliott wave analysis alternative

If the previous count was optimistic in the long-term, this one makes things look good for the bulls even in the not-so-distant future. It implies the idea that copper is not approaching the end of a fifth wave, but is actually advancing in the most powerful phase of every impulse – wave (3) of III. If this is the correct outlook, the three-wave retracement we were expecting would not occur at all. Instead, much higher levels are on the table. That is exactly why shorting an uptrend never recommended – it is extremely dangerous. Having these two alternatives in mind, “hope for the best, prepare for the worst” sounds like a good motto.

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Price of Palladium at a Critical Juncture

It has been a slow and choppy advance, but the price of palladium somehow managed to climb from as low as $450 in January, 2016, to $818 as of this writing. This means that an investment in palladium would have returned nearly 82% since the start of last year. However, the past is not always a…

Read More »

Ethereum Ready for a Pullback?

Less than two years since its launch on July 30, 2015, ethereum has already become the second largest cryptocurrency in the world, with a market capitalization of roughly $4.5 billion, trailing only to bitcoin’s $20 billion. We are definitely not the people to ask how exactly the blockchain technology works, but ethereum’s decentralized nature means its price…

Read More »

NZDUSD: Interpreting the Recent Shine Loss

NZDUSD has been rising during the last month and a half, but lost its shine recently by dropping from 0.7374 to as low as 0.7155 in just five trading days. As always, the main question is where is the pair going to from now on? If you do not want to blindly follow the herd,…

Read More »

NZDUSD Poised for a Corrective Recovery

NZDUSD has been steadily declining since November 8th, when it reached 0.7402. Currently trading near 0.7020, the bears seem unstoppable and after a selloff of over 400 pips, it looks like the pair is headed much lower. However, even the strongest trends are interrupted by moves in the opposite direction, which might cause a lot…

Read More »

EURAUD Could be Aiming at 1.51

The EURAUD pair has been in a downtrend for a month since February 11th. Then, on March 10th, the bulls woke up with a bang and lifted the exchange rate from 1.4465 to 1.5085 in just five hours. Today, EURAUD fell to as low as 1.4662, before climbing above 1.4850 so far. Which of the two…

Read More »

EURJPY Looking for Fibonacci Support?

The Elliott Wave Principle is a market forecasting method, based on pattern recognition. If an analyst is able to recognize a pattern on the chart and knows what should follow, he could as well be able to predict what the market is most likely to do next. That is what we are going to try…

Read More »

EURCAD’s Recent Weakness Deciphered

EURCAD surpassed the 1.61 mark on January 20th, but the bulls could not hold on to that momentum, which led to a sharp decline to 1.5245 just five days later. Currently, the pair stands slightly above 1.5415, but the recovery seems to be a timid one, not giving us enough confidence to “buy the dip”.…

Read More »

More analyses