Copper is a key industrial commodity and its performance is often used as a guide to economic growth and development. The COMEX copper chart is suggesting a bearish economic outlook at a time when other economic indicators are suggesting a bullish outlook. Usually a rising DOW index which suggests economic growth is matched by a rising copper price. This is not happening in the current situation so investors are looking carefully at the strength of the divergence between the copper price and other market indices.
The weekly COMEX copper chart is dominated by a long term symmetrical triangle. This is generally a pattern of indecision. The bullish optimists in the market push prices higher, and this is shown by the rising trend line.
The bearish pessimists are sellers, pushing prices lower and this is shown by the down sloping trend line. These two trend lines suggest indecision in the market because there is no clear bullish or bearish pressure. The probability of an upside or downside breakout is around 50 percent.
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The most important feature of the symmetrical triangle pattern is the way it is used to project upside or downside price targets. Once the breakout has started there is a high probability these targets will be achieved. There is a higher probability that downside targets are achieved because it is always easier for a market to fall than it is for the market to rise.
The base of the symmetrical triangle for copper developed in September 2011. It is $0.91 in height. The value is projected downwards from the point where the price moves below the lower trend line near 352 cents or $3.52 per pound. The downside target for copper using the symmetrical triangle pattern is near $2.61.