Tag Archives: copper

Recession Ahead? Watch Dr. Copper

After selling off this summer, copper has been consolidating over the last couple months and appears to be forming a wedge-type pattern that may indicate another strong move when the metal breaks out from it one way or another. Copper has a reputation for leading the global economy and is known as “the metal with a PhD in economics.” As our Chief Investment Strategist Lance Roberts recently showed, there is a rising risk of a recession, and the financial markets may be starting to price this in.

If copper breaks down from its most recent wedge pattern, it would be a worrisome sign for the global economy. The next price target and support level to watch is the $2.5 per pound support level that came into play over the last couple years.

Copper Daily Chart

The weekly chart below puts the current wedge and support levels into perspective. If copper breaks down from its wedge, the next support to watch is $2.5 and, after that, $2 per pound.

Copper Weekly Chart

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‘Dr. Copper’ Plunges In Worrisome Sign For The Global Economy

As if the recent turmoil in Turkey, South Africa, and other emerging markets wasn’t enough, commodities including copper are now sinking as well. Copper, which is known as “the metal with a PhD in economics” due to its historic tendency to lead the global economy, is down nearly 4 percent today alone and 22 percent since early-June. Copper’s bear market of the past couple months is worrisome because it signals that a global economic slowdown is likely ahead.

The chart below shows how copper was bouncing around in a range between $3 and $3.3 per pound until it peaked and broke down in June:

Copper Daily Chart

The longer-term chart shows how copper surged after Donald Trump’s election win (due to expectations of an infrastructure boom), climbed within a channel pattern, and then broke down from the channel in late-2017. The $2 per pound support is the next major level to watch if copper’s bearish trend continues.

Copper Weekly ChartCopper and other base metals are falling for a wide variety of reasons including the plunge in Turkey and other emerging markets, the strengthening U.S. dollar, and China’s economic slowdown due to the trade war. If the dollar continues to rise and the emerging markets turmoil spreads (which I ultimately expect to happen), there is a high likelihood that copper will continue its downward trend.