Copper Commodity Elliott Wave Technical Analysis 1

By Peter Mathers of TradingLounge

Wednesday, August 28, 2024 10:30 AM EDT

Copper Elliott Wave Analysis

Copper prices have been in a pronounced downward trend since peaking in May 2024, marking a significant reversal in the market. From May 21st, 2024, the metal has shed nearly 18% of its value. This decline has unfolded despite a recent bounce, which appears to be a corrective phase within the broader context of a strong rally that commenced in October 2023. The ongoing correction seems to be forming a classic three-wave structure, characteristic of Elliott Wave theory, suggesting that further downside movement is likely before the resumption of the long-term uptrend.

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Long-Term Copper Chart Analysis

Analyzing Copper's long-term trajectory, particularly from March 2020 onwards, the metal seems to have developed into a diagonal structure at the supercycle degree. In this context, Wave (I) concluded in March 2022, followed by Wave (II) in July 2022, and the expansive Wave (III) ended in May 2024. Currently, the market is unfolding Wave (IV), which appears to be emerging from the May 2024 high. This wave seems to be taking the form of a double zigzag pattern, a common corrective structure in Elliott Wave analysis, which typically indicates a complex correction phase before the market resumes its primary trend.

Daily Chart Insights

On the daily chart, there is evidence that the cycle degree Wave w of (IV) was completed in early August 2024. This completion led to the ongoing corrective bounce, which is identified as cycle degree Wave x of (IV). According to Elliott Wave principles, cycle degree Wave x should ideally form a three-wave structure, and the current market activity suggests that we are likely in the first leg of this formation. The H4 chart corroborates this view by showing the price in an impulsive wave rally, specifically in the primary degree Wave A (circled) of cycle degree Wave x.

H4 Chart Analysis

The H4 chart provides a closer look at this impulsive rally, revealing that the price is in Wave (5) of A (circled). This wave is now entering a critical Fibonacci resistance zone, which often serves as a significant barrier for the market, potentially triggering a reversal. This zone is expected to act as resistance, leading to the formation of Wave B (circled) in a decline. While short-term price action may see Copper initiating a bearish correction, the broader, long-term perspective still suggests a continuation of the downside trend before a sustained reversal can be expected. This analysis aligns with the Elliott Wave principle, where corrections and rallies form part of a larger market cycle, eventually leading to the continuation of the primary trend.