Dr. Copper is weak and at risk for a downside break, according to Merrill Lynch’s technical team:
Copper futures (aka Dr. Copper) are often used as a proxy for global economic growth expectations. Dr. Copper has a weak chart pattern and the risk is for a significant breakdown that would not bode well for global growth expectations. The dominant pattern is a potential three-year head and shoulders top and the right shoulder of this pattern is a developing bearish head and shoulders continuation pattern.
The annotated chart below shows the H&S top forming, and the key question becomes whether or not the neckline breaks . . .
Source: BofA Merrill Lynch Global Research, Bloomberg
Dr. Copper is weak and at risk for a downside break
Technical Analysis, 10 August 2012