Chart of the Day: Copper

Traders who are comfortable with risk will want to consider a final stop loss point.

There’s an old market cliché that’s easy to overlook: “The trend is your friend.”

Overall, copper’s been in a larger bull market over the past two years, but was hit hard in the last six months. Much of the reason was due to China auctioning its own reserves, after the price ran too high. But now the metal has cooled, and bulls could be back for more.

And, the chart of Peru Copper shows just that. The larger two-year uptrend is still intact... something buyers have already noticed. But interestingly, the stock recently broke above the six-month downtrend, and is now trying to establish a base above $4.

It’s important to note that the below weekly chart shows $4 as 50-week moving average support, and ascending support of the two-year trend. Buyers here have optimistic risk to reward, using the $4 area as a stop loss point.

The relative range final stop is $3.21, which is certainly not conservative for more unadventurous investors. But for those who are comfortable with risk, it’s a final stop loss point to consider.

Exit is everything.

2/22/07

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