Copper: A Retracement Everyone Should Be Watching
Despite recent inflation slowdowns, we anticipate a new era where the consistent demand for raw commodities triggers temporary supply disruptions, potentially leading to significant returns for investors in tangible assets. While Crude Oil offers the broadest inflation protection and Gold protects against stagflation (rising inflation with declining economic growth ), Industrial Metals, such as Copper, provide a perfect mix in this new green energy era. Having the right mix of commodities in a diversified portfolio can help offer protection against a wide range of uncertainties.
The Demand Structure is Changing
There is a push for increased electric power use because the green energy revolution, rising EV Vehicle demand, and advancements in AI have all strained the out-of-date electrical grid. The combination pushes demand for copper, silver, and other metallic metals higher for the first time in a decade. That comes at a time when increased regulation makes it harder to bring on additional supply.
Taking it to the Charts
After a historical rise in the first half of 2024 fueled by excess speculation, open interest has recently declined to more normalized levels, leading to a 50% price correction from the February 9 low of 33.70/LB to the May 20 high of 5.19/lb. We see an attractive risk-reward dynamic using calculated options such as Bull Call spreads or outright call options to speculate on a price recovery. We firmly believe that a "Commodities Supercycle" is underway.
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CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
The Demand Structure is Changing
There is a push for increased electric power use because the green energy revolution, rising EV Vehicle demand, and advancements in AI have all strained the out-of-date electrical grid. The combination pushes demand for copper, silver, and other metallic metals higher for the first time in a decade. That comes at a time when increased regulation makes it harder to bring on additional supply.
Taking it to the Charts
After a historical rise in the first half of 2024 fueled by excess speculation, open interest has recently declined to more normalized levels, leading to a 50% price correction from the February 9 low of 33.70/LB to the May 20 high of 5.19/lb. We see an attractive risk-reward dynamic using calculated options such as Bull Call spreads or outright call options to speculate on a price recovery. We firmly believe that a "Commodities Supercycle" is underway.
tradingview.com/cme/
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.