(HG) Copper Teeters Around Key $3.6935

Technicals, March 7, 2012; 7:40am

This week's resumption of 29-Feb's bearish divergence in short-term momentum clearly confirms at least the intermediate-term trend as down. And by virtue of the extent and impulsiveness of yesterday's break, the market has defined yesterday's 3.8830 high as the corrective high and risk parameter the market now is required to recoup to jeopardize the impulsive integrity of a broader bearish count and possible break below 17-Feb's key 3.6935 low on an active-continuation chart basis.

The pertinence of Feb's 3.6935 low as a key risk parameter to a broader bullish policy is clear in the daily log, active-continuation chart below. The market's rebound from that low acknowledges the 38.2% retrace of Dec-Feb's preceding 3.2325 - 3.9895 rally and defines 3.6935 as the lower boundary to what is currently considered a corrective/consolidative pattern within a broader bull trend. A failure below 3.6935 would immediately threaten such a bullish count and expose the past month's non-trending behavior as a reversal pattern rather than corrective and one that could leave the market prone to more extensive losses below 3.6935.

The weekly log close-only chart below shows the market thus far sustaining gains above former 3.7060-area resistance-turned-support. This is constructive and consistent with a broader bullish count. By the same token, it's interesting to point out the market's rejection thus far of the (3.9167) 50% retrace of Jul-Sep'11's 4.4795 - 3.1520 plunge. A weekly close below 3.70 could certainly expose a larger-degree correction or reversal lower.

In sum, a neutral/sideline policy remains advised for shorter-term traders with tighter risk profiles following last week's mo failure. A bullish policy remains advised for longer-term traders with a break below 3.6935 still required to warrant moving to the sidelines as well in order the circumvent the depths unknown of a larger-degree correction or reversal lower. Strength above yesterday's 3.8830 high will mitigate the recent shorter-term bearish factors and reinforce a broader bullish count to eventual new highs above 3.9895.

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