Many traders watch copper as an indicator of industrial sentiment, informing their trading of "risk" assets generally, and particularly resource and industrial shares, commodity currencies (eg AUD, CAD) and oil. Copper started an uptrend on 21 December, peaking on the first day of 2013 trading.
The steep rise saw overbought signals on a number of indicators - but the recent pullback clears the overbought. With the global outlook fundamentally improving (growth in China stabilised, higher tax revenues in the US) the positive outlook for copper is important for other markets, and is pointing to a potential trade in copper itself.
You can see that the rise pushed through the upper Bollinger Band (yellow arrow) and drove the RSI to 70%. However, the four day pull back not only saw a reversal to near the moving average (light blue, middle line) but brings the price close to the uptrend (green straight line).
More cautious traders may wait for a pull back to those exact points before entering a trade. My concern is that I rarely find the "perfect" set up. To take advantage of any moves towards resistance at $382.75, as well as any further pull back, I'll split my trade in two:
BUY Copper at market, stop loss below $363.00
BUY Copper at 364.10, stop loss below $360.00