History Repeats Itself: COPPER

We all are very well aware of the basic principle of technical analysis is that the history tends to repeat itself. The crowd cannot change their motivation overnight it means the people are expected to react the same way to a certain situation as they did in past the same certain situation.

If we think based on technical analysis context, the market is driven by the mass psychology. And the randomness of price movement in the market is the consequence of greed and fear, pain and pleasure. So sometimes price movement react exact the same way as it has reacted in past on particular occasion.

Below is the copper daily chart representing three waves these are wave-A, wave-B, and wave-c .The pivot point or the start point of wave-A is 13th Jan 2016 and its price ranging from 291 to 343. After achieving 343 price level wave-B has started and it seems to be irregular flat correction structure. Now the low at 9th June 2016 is may be the end of wave-B and the same point can be considered as the starting point of wave-C.

The purpose of this article can be fulfilled by the picture given below, we can easily identify the wave-C is being traded and yet to be finished. it has very high probability to illustrate the same pattern or move ,exact the same way as price reacted during the completion of wave-A.

Now take a look at bigger picture, here is the weekly Copper chart. We can see the movement of price has channelized itself and moving downward since Aug 2013. Channelize prize moment on the chart is always a very useful tool to understand the price movement dynamics as once the channel has been established its both upper and lower price line react as support and resistance level. As illustrated in the picture, the Copper price has failed to break lower trend line in Nov 2015 and bounced back. It has again retested in Jan 2016 and failed again.

The reason behind this bigger picture view only shows you the price has taken the support of lower trend line and now it is heading towards the upper line of the channel. In simple words, price moment is repeating itself the same way of past wave-A and it has very high probability to make zigzag (AB=CD) structure.

Let's zoom into the hourly time frame, here is the clue which is supporting this thinking and showing the bullish sign on charts. The implications of an inverted Head and Shoulder pattern is bullish and it’s both neck and shoulder line work as resistance and support for the price respectively.

CONCLUSION: It is always the right choice to follow the flow of greed or fear, in other words, traders should always make an educated choice while investing money into the market and one should follow the trend of mass psychology. The probability of traveling copper price more than 350 is very high as above charts somehow indicating the wave-A is repeating itself and heading towards the upper trend line of the channel.