Elliott Wave on Copper
Short Term Forecast
Copper is at all time highs, but the question many are asking is, where does it go from here. The first long term chart illustrates that another parabolic advance is taking place for copper. Parabolic advances are powerful moves that at some point can no longer be supported by gravity. What I mean by this, is when they top out, the the decline is (almost) always as sharp as the advance. The price action can't be sustained for these type of advances and the reversal can be devastating if not prepared. Our charts from Dec 2004 and Dec 2005 have been combined together to add insight on the long term trend of copper. Our 2004 chart indicates that we were expecting a move to at least the first possible top trendline, which has been attained and then some. We can see from the long term chart, that a bull market has been in play since Oct 2001 but this parabolic move appears that it is getting close to completion.
When a reversal for copper is confirmed by out Elliott Wave count, the implications for the economy will also not be positive. It is not a coincidence that the markets and copper have rallied together from the lows in 2001-2002.
The 3rd chart indicates that copper is either in wave (5) of wave (V) up or that it is still wave (3) up. We would see a pullback in wave (4) before further upside in wave (5) for the second possibility. These possibilities will be examined on the next pullback.
We will be looking for corrective or impulsive action on the next pullback to confirm which count is in play. A break below the top trendline on the next pullback will be bearish.
These charts are only a guide so that you can follow the action and watch for the expected topping action. The action could play out exactly as illustrated or it may need adjustments as we follow it through.
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