The price of copper has acted extremely strong recently. As explained in our analysis Copper Price Surging, Close To New Secular Bull Market, which contained a must-see chart, copper was close to a secular breakout. If such a breakout materializes, it will imply the start of a new secular bull market.
Meantime, copper retraced slightly, and is trading below the critical $2.6 – $2.8 level.
Copper miner Freeport McMoRan, one of the top copper miners, has a very constructive setup. After breaking out from a downtrend in October, it is now breaking through triple horizontal resistance (purple dotted line).
We see an easy ride to $16 unless the copper price starts falling.
In case the price of copper continues to rise (and that is a big IF), Freeport McMoRan will move to $24.
At this point, it is unclear to us whether base metals are starting a new bull market. Chances are high that it will be the case, because we outlined that our leading market indicator signals the start of a new ‘risk on’ period, as explained in Markets Outlook for 2017.
During a ‘risk on’ period, risk assets like stocks are bid, but there is no certain path for commodities. Given gold’s sell off, it would make sense for copper, acting as an economic barometer, to rise together with stocks.
The ultimate confirmation will be there once copper rises above $2.80 for three consecutive weeks.