Copper’s Not-So-Hidden Signal for Gold

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The entire rally from August to September 2024 was a confirmation of the collapse below the rising, long-term support/resistance line that started at the bottom of 2020. After all, this line is where copper reversed.

What is striking about copper’s current performance is that quite sharp (from the long-term perspective) corrections can be expected after the initial part of the decline. Therefore, what we saw fits perfectly into the broader bearish pattern.

Think about the situations I highlighted with yellow arrows. Every last summit of the last twenty years has been followed by rallies like this.

What is particularly interesting from our point of view is that these cases have generally been great short positions in the case of mining stocks, silver and gold. I have marked these cases with yellow arrows in the lower part of the graph.

So is it justified to get excited about copper’s recent “strength”? Yes, but only as long as you are in a position to benefit from the likely decline. However, some long-term opportunities (in silver) continue to look favorable.

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