Copper, on a red-hot winning streak, is testing a critical level

As we wrap up this year and look ahead to 2018, many investors are focused on how strong global growth might be next year. This consensus is looking for strong growth, with U.S. tax cuts leading the way, though certainly not the exclusive catalyst for global economic expansion.

Of course, the consensus can frequently prove wrong; one only has to look back at what the majority thought about the dollar and long-term interest rates this time last year ("They have to move higher!") or what the majority thought about oil last June ("It has to go lower!") to see how wrong the masses can be at times.

With China re-engaging in its deleveraging process, it's no certainty that global growth in 2018 will be as strong as the herd believes.

With that in mind, copper is traditionally a leading indicator of worldwide growth, and I'll be watching the commodity's price action closely in the coming weeks and months.

Just a few weeks ago, the key commodity was showing signs of weakness, but it has rallied very strongly since Dec. 5. In fact, its 11 percent rally since then has taken it to fresh new highs, back to early 2014.

We do have to point out that this new high is just a slight one, so we don't want to get ahead of ourselves. Just above copper's current levels are the highs from early and mid-2014, an area that represents the 50 percent retracement of the entire sell-off from 2011 highs. Thus, we are approaching some very important resistance levels.

Copper

In other words, if copper can break above that 3.27 to 3.34 range in any meaningful way, this should be very positive for the metal. On the flip side, if copper fails at this level and rolls back over in a significant way, that's going to be quite negative.

Keep in mind that if copper pulls back over the next week, it will not mean that the rally has failed, nor would a slight break above that range mean that a breakout has been confirmed.

Bottom line? There is no question in our mind that copper is at a key technical juncture, and its next significant move should be quite important.

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Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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