How (Not) to Track Copper Prices Using U.S.- China Trade Talks

See why using Elliott wave analysis to anticipate copper's near-term trend changes is the better option

by Nico Isaac
Updated: September 06, 2019

On Thursday September 5, copper prices clocked their sharpest two-day rally since November 2018. And, according to mainstream analysts, one main catalyst caused the red metal to turn red hot; namely, an upbeat twist in the ongoing U.S. versus China trade war. Said the Wall Street Journal

"Copper prices rallied Thursday, bringing their two-day climb to 4.5% on hopes that coming trade talks could relieve some pressure on the global economy."

The problem is, when it comes to the soap opera I'm calling As the Trade War Turns, hope changes to fear changes to uncertainty all the time. It's an emotional roller coaster that never stops.

In fact, on September 3, copper prices were weighted to their lowest level in two years. The same trade war climate was then entirely without hope as President Trump slapped a new 15% tariff on a range of Chinese goods and Beijing retaliated with its own tariff boost on $75 billion worth of American products. Stressed one Sept. 3 news source:

"Copper skidded to its lowest since mid-2017 as investors faced fading prospects for a de-escalation in the US-China trade war" (Business Standard)

And yet, copper prices suddenly rallied over the next two days.

The fact is, the best strategy for tracking copper prices is one that doesn't consider the constantly changing trade-war climate at all; but rather, uses the Elliott wave pattern unfolding on copper's price charts.

Here, we go back to mid-July, when copper prices stood just under $3. On July 19, our Metals Pro Service analyst Tom Denham identified a bearish Elliott wave setup on copper's price chart and set the stage for a multi-week decline to new lows. Tom wrote:

"The sharp fall of prices on Friday may be the start of wave y (circled) with potential to new low ...over the next few weeks.

"The outlook is bearish while price holds under the 2.7570-280.00 area."

From there, copper embarked on a gut-wrenching sell-off to a two-year low on September 3. That day in his intraday Metals Pro Service copper analysis, Tom Denham published this bullish outlook:

"Copper is up sharply from what may be a wave (c) bottom at 2.4820...the sharpness of the rise looks more like a new impulsive development.

"The outlook now is bullish while price holds above 2.5035. "

Copper's largest two-day advance since November of 2018 followed on cue -- Elliott wave cue, that is.

As the chart below shows, the only "trade talk" our Metals Pro Service analysis found relevant was the high-confidence Elliott wave setups that enabled traders to anticipate a major high and low in copper.

Right now, our Metals Pro Service reveals where copper -- along with gold, silver, platinum, and more -- could be headed in the days and weeks to come.