Copper Technical Analysis – The market demands more from China

Fundamental
Overview

Copper erased most
of the gains from last month’s strong Chinese easing measures as the market got
disappointed on the lack of follow through. In fact, this is something we’ve
seen also in the Chinese equity markets with the Hang Seng index being down
14%.

There’s a strong
correlation between the Chinese stock market and copper as China makes up for about
60% of world’s copper demand. Therefore, we will likely need to see more easing
measures from China to see new highs.

Copper
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that copper couldn’t break above the 4.70 level and eventually dropped all
the way back to the 4.32 level. This is where we can expect the buyers to step
in with a defined risk below the level to position for a rally back into the 4.70
resistance.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the trendline.

Copper Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a downward trendline defining the current bearish momentum. The
sellers will likely keep on leaning on it to position for new lows, while the
buyers will want to see the price breaking higher to increase the bullish bets into
the 4.70 resistance.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the strong support zone around the 4.32 level where we can also
find the 61.8% Fibonacci
retracement level for confluence.
The buyers will look for a bounce here, while the sellers will want to see the
price breaking lower to target new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Retail Sales and Jobless Claims data.

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