In May last year we looked at the copper price (Wired to Copper, 10 May 2021). In that article we highlighted the similarities to the 2004 experience when the price was in the middle of the 2001-2006 bull run. In May 2021, the US copper price was US$4.75 stretching to a peak at $4.89. As we suggested at the time the momentum readings were similar but remained only a guide. In 2004 when the price encountered its barrier it pulled back and then managed to churn tightly higher over a twelve-month period before resuming the upward path.
When the price hit the $4.89 peak the momentum overrun in this instance produced a pullback to support around the $4.00 area with the subsequent oscillations forming a triangular pattern, which is still influencing the price. This style of action is neutral and doesn’t suggest a future direction but the momentum readings have turned favourable and allude to a test of the top of the phase in the $4.70-75 area. A breakaway followed by a rise through the previous peak would signal the potential for the next stage higher for the metal towards $5.00 and then $6.00 and possibly much higher. Support is located around $4.50 and more critically around $4.00. (note current copper price of $4.51)
Copper Mountain Mining’s (SX: C6C $4.38) share price closely follows the copper price. The company’s main mine is located south of Princeton in British Columbia, Canada. It boasts a conventional open pit, truck and shovel operation. The mine produces over 100 million pounds of copper equivalent per year with a large resource that remains open laterally and at depth. In Australia the company operates the Eva Copper Project in the Mount Isa area and it is expected to add around 100 million pounds of copper per annum. Copper Mountain is dually listed with the symbol ‘CMMC” on the Toronto Exchange.
The share price for Copper Mountain completed a significant base in the later part of 2020 when the price moved up strongly through $1.40. Since then, the price rose strongly to peak at $5.42 in May last year in line with the copper price. A similar style triangular phase has developed and like copper appears to be tackling resistance in preparation for a breakthrough and establishment of the next stage higher. The price faces a barrier zone between $4.60 to $4.80 with a breakthrough triggering a test of the peak with the potential to $6.00 and possibly $7.50.
In the event of a rebuff from the barrier zone the price would seek support around $4.00 and in the middle of the phase in the $3.60-70 area.