{"id":58230,"date":"2023-02-14T12:13:58","date_gmt":"2023-02-14T17:13:58","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58230"},"modified":"2023-05-01T11:38:07","modified_gmt":"2023-05-01T15:38:07","slug":"dr-copper-prescribes-gold","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/02\/dr-copper-prescribes-gold\/","title":{"rendered":"\"Dr. Copper\" Prescribes Gold"},"content":{"rendered":"

The idea behind \"Dr. Copper\" is that copper is a reliable barometer of economic growth, as the demand for copper tends to rise when the global economy is expanding and fall when it's contracting.<\/p>\n

Last December, I shared my bearish outlook for copper futures titled \u201cFed Fears Inflation, Copper Fears Hawkish Fed\u201d<\/a>. It was based on the long term map<\/a> of downward move with a current pullback playing as a junction between large 2 legs down. <\/p>\n

The majority of readers expressed a mildly bullish stance, with the belief that the price of $3 for copper futures should hold. <\/p>\n

The second largest group had an ultra-bearish outlook, targeting a price of $1.25 during a potential Great Recession. <\/p>\n

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Let us see in the weekly chart below the updated map. <\/p>\n

\"Copper<\/a>
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Source: TradingView<\/a><\/em><\/center><\/small><\/p>\n

The copper futures price stalled at the same level after an earlier attempt to push below the red trendline support failed.<\/p>\n

The most recent low in U.S. inflation data in December 2021, which was the lowest reading since October 2021, gave traders hope that the Fed was about to stop raising interest rates. This increased demand for copper, causing the price to quickly break above the purple moving average and rise until it reached the double barrier of the 61.8% Fibonacci retracement and the gray Volume Profile.<\/p>\n

The price came down a bit failing to overcome resistance. A better-than-expected January \u201cJobs Report Dropped A Bombshell On The Markets\u201d<\/a> including copper futures. The market realized that the Fed would be able to raise interest rates further and larger and sold off most instruments. The meltdown of copper price accelerated. \u00a0\u00a0<\/p>\n

Currently, the price has reached double support comprised of the red trendline and purple moving average. The RSI has yet to touch the crucial level but it is declining as well.<\/p>\n

The price has formed the red Rising Wedge reversal pattern within the expected pullback. The breakdown of the trendline support would ignite further sell-off.<\/p>\n

The C point had been set higher so I raised the D point accordingly to $2.45 where the CD is equal to the AB segment. It is located in the valley of Volume Profile\u2019s largest support. <\/p>\n

Usually, the market doesn\u2019t leave former valleys untouched and we could see a deeper collapse to retest the $1.9-$2.0 area (2016, 2020 lows). The Great Recession\u2019s bottom at $1.25 is the ultimate bearish target.<\/p>\n

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What is your outlook on copper futures prices these days?<\/strong><\/p>