COPPER signaling the start of rate cuts? Potential danger ahead.
Copper (HG1!) completed two straight red months following May's High at the top of the 3-year Rising Wedge pattern. Last time the commodity formed this pattern was back from May 2006 to September 2008. In fact the recent May 2024 Higher High resembles that of May 2008, whose rejection broke the Rising Wedge downwards.
As you can see, during both patterns, the US10Y (orange trend-line) stopped rising and turned sideways on Lower Highs, while the U.S. Interest Rate had peaked and started falling.
What 2006 - 2008 suggests, is that possible rate cuts may be ahead of us, pragmatically the markets have already priced this to a large percentage in September. But at the same time, it highlights the danger of a market-wide collapse, as the first month after the September 2007 rate cut, the stock markets peaked and the U.S. Housing Crisis begun.
What could be different this time and avert a new financial crisis of such proportions is that the stock markets haven't shown any signs of correcting yet. As a result, potential rate cuts may have a mostly positive bullish continuation effect as post July 2019.
What do you think will happen next? Bullish continuation or new Bear Market?
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As you can see, during both patterns, the US10Y (orange trend-line) stopped rising and turned sideways on Lower Highs, while the U.S. Interest Rate had peaked and started falling.
What 2006 - 2008 suggests, is that possible rate cuts may be ahead of us, pragmatically the markets have already priced this to a large percentage in September. But at the same time, it highlights the danger of a market-wide collapse, as the first month after the September 2007 rate cut, the stock markets peaked and the U.S. Housing Crisis begun.
What could be different this time and avert a new financial crisis of such proportions is that the stock markets haven't shown any signs of correcting yet. As a result, potential rate cuts may have a mostly positive bullish continuation effect as post July 2019.
What do you think will happen next? Bullish continuation or new Bear Market?
-------------------------------------------------------------------------------
** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. **
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