Let’s evaluate some interesting intermarket input!

Relative Strength (RS) Copper on Gold
Relative Strength (RS) Copper on Sp500
Relative Strength (RS) Copper on Usd/Cny

From 2013 to 2016, the relative strength of the 3 instruments shows a copper prices weakness compared to gold, the S&P 500 index and the renminbi dollar exchange rate, with a drop in non-ferrous metal price about 33% (note how all 3 forces are oriented in the same direction – bear market).

Since October 2016, the copper RS has allowed it to rebound generously, with a remarkable performance (+35%). The same for June 2017 (+35%).

There are then relative force movements in favour of copper (June 2018 -21%, April 2019 -16%) with force movements (January 2019 +16%, September 2019 +15%).

The interesting part is to observe how the force/weakness of the 3 relative forces allow the red metal to grow/decline. In 2020, the relative force (FR) Copper_Usd/Cny, after returning to the 2019 lows, is trying a first reaction. Analyzing the weekly chart, it can be seen that prices are precisely in contact with the dynamic resistance offered by the bearish trend started from the August 2019 highs. Beware therefore to a recovery of strength of the Chinese currency against the dollar and therefore to an increase of the FR COPPER_Usd/Cny.

USD/CNY – Weekly chart

As far as the FR Copper_Gold is concerned, we are at the 2016 minimum. A possible adjustment of gold prices, after a sharp rise to the 2013 highs, could help to strengthen the copper relative strength.

Gold – Daily Cash Chart

Finally, as far as the FR Copper_SP500 is concerned, the trend is definitely downwards. Beware, however, that the American index, on a monthly basis, is creating a candle that denotes a long upward shadow, a pattern of potential downward reversal called “Shooting star”.

S&P500 – Future 2020 March

Then keep under control a possible positive effect of the 3 relative forces, with a copper rebound on Gold, SP500 and Usd/Cny.


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