Gold is getting all the attention right now.
If you want to catch the next big move higher in metals, though, look to copper.
Copper is the Rodney Dangerfield of metals. It gets no respect.
[ad#Google Adsense 336×280-IA]As my colleague Brian Weepie explained yesterday, an extreme in the gold-to-copper ratio is pointing to an emerging opportunity for traders.
And over the past month, copper has outperformed gold.
Gold is up 6% since the middle of June. But copper has climbed 10% in that span.
It’s approaching the first upside target that I pointed out a month ago…
Here’s an updated chart of copper…
Copper broke out to the upside of a bullish falling-wedge pattern last month. The move sparked a rally all the way up to $2.26 per pound. That’s near the high of the year… And it’s a logical spot for the metal to encounter resistance.
Look, though, at the moving average convergence divergence (MACD) momentum indicator at the bottom of the chart. It has been pushing higher right along with the price of copper.
This tells us the momentum behind the recent rally is strong. Since there’s no negative divergence, the odds favor another push higher after any short-term pullback.
So we may see copper challenge the next resistance line up around $2.43 per pound. And that action would be enough to turn the weekly chart bullish. Take a look…
Copper has been consolidating for the past several months. If it can break out to the upside of this pattern – which will take a move to more than $2.43 per pound – then it will open the door to much larger gains.
In the short term, copper has had a great move and is now bumping into resistance. Don’t be surprised if it pulls back a bit from here.
But the longer-term picture for copper is turning bullish. Traders should take advantage and buy into any short-term weakness.
Best regards and good trading,
Jeff Clark
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Source: Growth Stock Wire