Blue or Red pill for LME Copper?

Like the Matrix's Neo, copper, will have to think hard about which colour pill it will choose in Q2.

The LME Copper contract is at a pivotal price point and it soon has to decide which direction it wants to go.

Lets take a look at the LME copper monthly chart to fully understand where things could go and where things could go wrong. There is no certainty in this market. Price often dictates the narrative and as such, we will focus solely on copper price action.

Bear Case (Red Pill):

• The LME copper price now has similar price structure to that seen at the 2011 high.
• The 2011 high created a bearish double top and if memory serves right,?every new ATH created by copper has resulted in a backtest of the long-term uptrend line?(see blue arrow).
• The pink arrow signals the LME copper price did break out of the 20 MMA but failed to produce a bullish monthly close above the 50% Fib of the 2011 high-to-low and it did not cross above the 2012 high.
• In the current price action, LME copper price briefly traded above the 50% Fib this month but has since pulled back. The red metal needs a positive monthly close above the Jan 2023 high first to negate the bearish price structure.

Bull Case:

• It is well documented that?copper's fundamental backdrop will remain very bullish for many years to come.
• Copper can be found in all of the mega trends of things and it plays such a pivotal role in achieving a circular and greener economy.
• The copper price has the chance to abandon the bearish price structure as discussed above. A clean bullish run above the January 2023 high will ensure that copper bulls can carve out a new ATH.
• The bullish narrative will only be negated if the LME copper price produces a bearish monthly close below the rising 50 MMA.

If you are still reading this far - thank you, and please believe me I am not trying to leave you hanging.

What happens for copper in Q2 will dictate where the rest of the base metals are heading, potentially until the end of this trading year. Should the bearish scenario play out in the copper price, it could replicate the bearish price structure and force recently bullish funds to head for the exit again. If the bull case plays out, it is a matter of when - and not if - for a new all-time high to emerge sometime this year.

Some are already making loud noises that the copper price is ready to pop and the sense of FOMO and YOLO is hanging in the air (just like the bullets here).

Our current perspective is that we need to monitor the price action in Q2. Solid confirmation that our copper Neo has made its decision on which pill to swallow could set the story for the rest of this trading year.

Here are some of the elements that we will look for:

• Can the LME copper price produce a strong bullish close above the Jan 2023 high?
• Or will LME copper produce a bearish close below the 50 MMA?

So, if you do not want to miss out on our next analysis and outlook, perhaps have a word with my colleague Afzaal Mir who will be happy to set you up to have a glimpse of The Matrix!

For everything else, you can reach out to Fastmarkets Metals and Mining or click on the link below.

https://www.fastmarkets.com/metals-and-mining/base-metals/base-metals-price-forecast/?_gl=1*7gu4si*_ga*MTkxMzM5MDU5Ni4xNjY2MDIwMjEy*_ga_SJ8BZV6WD1*MTcwNTQ3Nzk2MC44MTQuMS4xNzA1NDk5NzgxLjYwLjAuMA

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