Copper Cycles Point To A July Low
Let us take a long-term look at the copper market. Below, we see the quarterly price based upon daily prices from 1890. The all-time high occurred in February 2011 and bottomed in early 2016. Looking at momentum, price formation and relative strength, price appears to be in a no man’s land. That is, there are no clear signals, suggesting that copper is in a trading range. Momentum and price reveal higher lows but lower highs. Relative strength versus the Moody’s Commodity index is flat.
Chart 1: Quarterly Copper Price from 1890
Based upon the data from 1890, here is a monthly histogram of the expected return. Note that the first quarter has traditionally been strong followed by a weak quarter two. July has been the strongest month in the last three quarters of any year. Since 1890, 59.2% of all Julys have been up for an average 1.1% gain.
Chart 2: Monthly Copper Price Histogram
The monthly cycle is depicted below. Over the last two years, 80% of the buy signals and 100% of the sell signals have been successful in ten trades. Note that there is a low in early July, which has seasonally been a strong month.
Chart 3: Monthly Cycle
Below, we see the weekly cycle. Note the early July low, reinforcing the low in the monthly cycle. In 15 trades, 75% of the buy signals and 71% of the sell signals have been successful in the last year. Thus, the seasonal, monthly and the weekly cycles point to early July as the next significant low. At that time, price will likely be in the $2.65-$2.85 area. The July rally will likely carry price close to the $3.00 area.
Chart 4: Weekly Cycle