Mining season is in full throttle, with traders and investors hotly anticipating the drill results from the summer drill programs of junior companies in the sector.
Following the enactment of President Joe Biden’s Inflation Reduction Act, all eyes have been focused on the minerals and metals that will be the most important for the energy transition. Although copper isn’t officially listed as a critical mineral, the amount needed to produce clean energy will be enormous.
At the Prospectors and Developers Association Conference (PDAC) in March, co-head of the EV battery materials research group and senior expert at McKinsey & Company Ken Hoffman highlighted the importance of copper for the energy transition, stating that its value will soar over the next decade.
Sprott Junior Copper Miners ETF COPJ tracks mid-, small- and micro-cap companies in copper-mining related businesses and corresponds to the total return performance of the Nasdaq-listed Sprott Junior Copper Miners Index. COPJ is the only pure-play ETF focusing on small copper miners, who will be critical in supplying the mineral, which is essential to EV batteries, wind and solar plants and other clean energy infrastructure.
The three largest holdings within COPJ are ERO Copper Corp. ERO, weighted at 5.64%, Hudbay Minerals Inc. HBM, weighted at 5.46% and Ivanhoe Electric Inc. IE, which is weighted at 5.32%.
The strength of COPJ is showing in its chart, with the ETF trading in a strong uptrend within a rising channel pattern.
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The COPJ Chart: COPJ entered into a rising channel pattern on May 5 and has made a fairly consistent series of higher highs and higher lows. The most recent higher low was formed on July 24 at $19.90 and the most recent higher high was printed at the $21.50 mark on July 15.
- On Wednesday, COPJ was printing an inside bar pattern on lower-than-average volume to consolidate the recent upswing. The inside bar leans bullish because the ETF was trading higher before forming the pattern.
- Traders can watch for big volume to eventually enter the ETF, which will break COPJ up or down from the pattern. If the ETF breaks bullishly, COPJ may find resistance at the top of the channel. If it breaks bearishly, support is likely to be found at the bottom trend line.
- COPJ has resistance above at $21.44 and at $21.92 and support below at $20.57 and at $19.69.
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