Known as the stethoscope of Global economic measure, Dr. Copper saw good momentum on last few weeks. Prices rallied from 2.10 to 2.50 within a matter of five too six weeks. When we see from the perspective of Price action trading, (on weekly chart) Yearly low is at key level 2.00 (tested in the beginning of January 2016). Later Prices struck in tight range from March till November. Eventually broke the key resistance level at 2.30 in Mid November. Now the question is – what caused these moves? Will the recent breakout sustains or not?
It seems market is pricing on upcoming supply disruptions. Proposed government tax policy in Zambia may trigger some changes in International Copper prices. The government will most likely introduce a new tax with an aim to curb importing copper concentrates. This might result in short-term supply squeeze, if market participants respond to it. Watch out for this critical legislation from Zambian government. Also keep an eye on supply forces and lookout for pullback, in case of breakout continuation. If there is any counter moves or counter patterns in price action, we need to change the trading plan.
