Potential setup in Copper, March 2018 contract.
If it breaks $3.12, depending on the today’s low, it can be a 10-to-1 reward-to-risk trade, if it hits $3.28, the next level of significant resistance. Reward = $4,000/contract.
The chart pattern is called a falling wedge and it is typically a bullish continuation pattern, following a strong uptrend. Basically the market has taken a breather, with tighter and tighter ranges, indicating that the “offerites” and the “biddites” are at a stalemate, with some of the biddites exiting the market and taking profits. When they exit, the offerites make inroads through the battle line (aka, price line), pretty quickly, until the larger contingent of biddites that’s been sitting on the sidelines with their pockets full of money wait for a new opportunity. Eventually, as the technical biddites and the fundamentals biddites join forces, the offerites get wiped out of the battle ground until the next trench line.
* Offerites: the traders selling, the “offer” in the market
* Biddites: the traders buying, together they form the “bid” in the market.
The battle line between the two is the price chart that forms over time.