Copper prices have been trending higher since bottoming around the $2.40 level in early February, despite the soft housing market where copper is used for pipes, wiring, and other home products. Strong demand out of China continues to help drive prices higher with the basis May high-grade copper reaching a contract high of $3.70 a few weeks back on April 17, 2007.

 In my view, prices could remain high as long as global demand for copper continues to rise. The U.S. economy also appears to not to be heading for another extended slowdown, which will help copper prices.

 Now, while the excitement continues, there are some signs on the chart that high-grade copper may be topping around $3.70 in the near term on some profit taking. Taking a look at the chart, the May high-grade copper future is holding at its trendline support and could head towards $3.80 and $4.00 if it can hold. The chart suggests the current hesitation in wanting to bid copper higher, given the risk of a potential top.

 The near-term technical picture is neutral, while the Relative Strength has also declined to the current neutral and looks vulnerable to some selling in the near term. The May copper is holding precariously at its key 20-day moving average of $3.51, but failure to hold could see a retrenchment back to the 200-day moving average of $3.12.

 The reality is, should the global economies slow, copper could take a major hit. Growth in China continues to be strong, and growth estimates were recently revised upwards. The U.S. housing market needs to see some improvement and reverse the current downtrend.

 What is keeping prices high is the demand from China, but, even so, any negative news could drive copper down. At break at the 52- week high of $3.6975 could see May copper move to $3.7377 and then mount an attack on $4.00.