Mapping the Market: Copper could be gearing up for a rally

Copper prices may be preparing for a significant rally, with gains of nearly 14% possible if the metal can clear a key hurdle, technical analysis indicates.

The bullish case starts with what chart watchers call a "false break." Earlier this month, copper slipped below a trend line drawn from the low it hit back in March. Trendlines link a series of previous highs or lows, and when prices break through one, it's typically read as a signal of where the market is headed next.

But copper didn't stay down for long — it climbed back above that trend line just three days later, and reversals like this are generally seen as a positive sign for prices.

That snap-back reinforced a broader pattern: copper has been consolidating, or trading in a fairly narrow range, since climbing off a low near $5.93 hit on June 24.

That range has run roughly between $6.30 and $6.89.

If copper can push decisively above resistance near $6.89 — the high reached on September 9, according to data supplied by LSEG — it could target a further gain of roughly $0.96, using a method called a "measured move" that sizes up potential gains based on the rally that preceded the consolidation.

Momentum indicators followed by market participants are adding to the optimism. The Relative Strength Index is rising without flashing overbought warnings, and the MACD indicator is also giving positive signals.

Still, the bullish outlook would fall apart if copper drops below support near $6.30, the floor of its recent trading range.

What the chart shows:

• Copper has been consolidating between $6.30 and $6.89