The Donchian channel strategy looks for securities that have broken out above or below the high or the low for the last 20 periods. This is a very popular trading stratgey made famous by the infamous Turtle Traders, created by Richard Donchian.
As you can see by the chart, todays candle has broken out above the high of the Donchian channel potentially signaling further gains.
The 50 day moving average has also just crossed over the 200 day moving average. This is know as the golden cross which is usually a strong indicator of an uptrend.
The confluence of these two indicators show strong support for further upside movement.
The market was further supported by the release of strong Chinese GDP data and a weaker Dollar, boosting foreign demand for the dollar-denominated copper.
If the commodity stays above the 27,000 support area our first target would be the the next resistance area at 27,800 – 28,000.
Failure to stay above this level and we could see the metal dropping to the low of the donchian channel at 26,200.
A break below the donchian channel and we possibly could see the commodity back down to the 25,500 support area.
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*All information in this article is the author’s opinion and is for educational purposes only. It does not constitute investment advice or a solicitation to buy or sell any financial instrument. Trading may expose you to risk of loss greater than your deposits and is only suitable for experienced investors who have sufficient financial means to bear such risk.