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Copper, on a red-hot winning streak, is testing a critical level

As we wrap up this year and look vanguard to 2018, many investors are focused on how strong global growth capacity be next year. This consensus is looking for strong growth, with U.S. tax weakens leading the way, though certainly not the exclusive catalyst for global economic bourgeoning.

Of course, the consensus can frequently prove wrong; one only has to look backwards at what the majority thought about the dollar and long-term interest in any events this time last year (“They have to move aged!”) or what the majority thought about oil last June (“It has to go shame!”) to see how wrong the masses can be at times.

With China re-engaging in its deleveraging deal with, it’s no certainty that global growth in 2018 will be as strong as the riff-raff believes.

With that in mind, copper is traditionally a leading for of worldwide growth, and I’ll be watching the commodity’s price action closely in the coming weeks and months.

Straight a few weeks ago, the key commodity was showing signs of weakness, but it has rallied very strongly since Dec. 5. In particulars, its 11 percent rally since then has taken it to fresh new highs, help to early 2014.

We do have to point out that this new high is just a unsubstantial one, so we don’t want to get ahead of ourselves. Just above copper’s current aims are the highs from early and mid-2014, an area that symbolizes the 50 percent retracement of the entire sell-off from 2011 highs. Then, we are approaching some very important resistance levels.


In other words, if copper can suspend above that 3.27 to 3.34 range in any meaningful way, this should be entirely positive for the metal. On the flip side, if copper fails at this horizontal and rolls back over in a significant way, that’s going to be quite antipathetic.

Keep in mind that if copper pulls back over the next week, it wish not mean that the rally has failed, nor would a slight break exposed to that range mean that a breakout has been confirmed.

Backside line? There is no question in our mind that copper is at a key technical juncture, and its next notable move should be quite important.


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