Copper futures: Rising wedge structure and equity market implications

Copper futures are unfolding within a rising wedge pattern, signaling that the market is running into its final (5th) wave of the structure. This pattern often suggests waning momentum but can still push higher before a potential reversal.

Key levels & projection:

Upside target: 5.2900, with key resistance at 4.8880 (Resistance-1) , 5.0395 (Resistance-2), and 5.1990 (Resistance-3)

Short-term support: 4.5185 – Key level to hold for continued upside

Long-term critical support: 4.0050 – Any breach here can trigger a sharp downside move

How to trade the rising wedge?

In a rising wedge, price action narrows within converging trendlines. While it can extend higher, a break below support confirms a reversal.

Strategy: Traders can ride the upside towards 5.2900, but must watch for weakness near the upper trendline & the resistances mentioned above. If price breaks below 4.5185, caution is needed.

Line in the sand: 4.0050 – Holding this level offers potential buying opportunities, but a breakdown below 4.0050 could lead to a larger decline.

Copper could complete this upside move holding key & critical support by the end of Q3, making these levels sacrosanct for both trend traders and breakout traders.

Impact on equities – Dow Jones & S&P 500

Copper is often seen as a leading indicator for the economy, as rising copper prices suggest strong demand, economic expansion, and higher inflation expectations.

If Copper continues its projected rally:

✅ Dow Jones & S&P 500 could remain resilient, supported by strong industrial and commodities demand.

✅ Cyclicals like Industrials, Materials, and Energy stocks may outperform, as higher copper prices signal economic strength.

✅ The Fed may turn more cautious on rate cuts, as rising copper prices often hint at inflationary pressures.

If Copper reverses sharply below 4.0050:

⚠️ It may signal economic slowdown concerns, potentially leading to a pullback in equities.

⚠️ Growth sectors may come under pressure, and defensive plays (Utilities, Healthcare) could see relative strength.