Copper Technical Analysis

Fundamental
Overview

Copper has been rallying like crazy in the past few months amid a pickup in
global growth, Chinese stimulus measures and concerns over tightness in global
mine supply. Unfortunately, as it’s often the case, the rally attracted the
momentum players and the price got overstretched leading to an aggressive selloff without a clear catalyst.

All else being equal, if we keep seeing positive economic growth and maintain
the risk-on sentiment, we could see new highs in the months ahead with
the Chinese officials likely increasing the policy support if the data were to show
some deceleration.

Copper
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that copper experienced an aggressive correction to the downside after
setting a new all-time high. The price bounced and consolidated on the trendline
where we have also the 61.8% Fibonacci
retracement level for confluence.

This is where we can expect
the buyers to step in with a defined risk below the trendline to position for a
rally into a new all-time high. The sellers, on the other hand, will want to
see the price breaking lower to increase the bearish bets into the 4.47 level.

Copper Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the consolidation between the trendline and the 4.85 level. A
breakout to the upside should see the buyers gaining more conviction and
increase the bullish bets into a new all-time high. On the other hand, a
breakout to the downside will likely trigger another selloff with the sellers aiming
for the 4.47 level as the first target.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see even better the current rangebound price action between the 4.75 support
and the 4.85 resistance. Note that we have another support at 4.70, so if we
were to see the price dropping below the 4.75 support it wouldn’t yet signal more
downside to come.

Upcoming
Catalysts

Today we get the US Consumer Confidence report where the
focus will likely be on the labour market details. On Thursday, we will see the
latest US Jobless Claims figures. Finally on Friday, we conclude the week with
the Chinese PMIs and the US PCE report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.