For the whole of July, copper was trending gradually upwards within a clearly defined channel, before slipping lower and becoming more volatile in the first week of August. Taking July's low point as a base an upward sloping trendline indicates that support is currently at 3552. Above the price action, values rose to a new high at 3672 before declining in a series of failures - a trendline joining these failures would offer an overhead resistance level at 3640. These two trendlines are converging as the market moves towards a point, forming a symmetrical triangle. This pattern is usually called a continuation pattern, indicating that the market will resume its previous trend. In this case, then, the market is marking time before resuming the uptrend. Since the market usually breaks out of a triangle around three quarters of the way along, this is imminent. If a break does not occur, the market may trade past the apex and will then continue to drift sideways. The breakout should be on a closing basis and confirmed by good volume. The extent of the breakout can be measured by taking the maximum height of the triangle, in this case between 3450 to 3672, and using this as a measurement of the likely upside break. Using this technique, the market has 222 dollars potential on the upside.
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