We have been focusing on metals over the past few months and have warned that should Shanghai copper futures close above Fibonacci retracement resistance at 38,500 yuan per tonne, a break higher would ensue. We had not realised just how much pent-up bullish pressure had gathered and are awestruck by last week’s phenomenal rally. Something similar was seen in the high-grade copper contracts on the Commodity Exchange in New York, which rallied from US$2.08 to US$2.70 per pound in three weeks. Rising open interest and very strong bullish momentum should set up for further rallies to the 49,000-yuan area, just ahead of the psychological 50,000 yuan per tonne. More importantly, price action since November last year marks an important secular low point.
