Copper Technical Analysis

Copper extended the rally
into new highs following some positive Chinese data. Moreover, the PBoC Governor Pan recently signalled more monetary
policy support to come which should be a tailwind for the market as long as the
global growth impulse of the last few months remains intact. The central banks
continue to support rate cuts this year although the timing got pushed back a
little after a series of higher-than-expected inflation prints. That could
raise the risk of a recession, so it will be something to watch out for in the
next few months.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper had an
incredible rally and it’s now pulling back. In fact, the price was very
overstretched at some point as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a key support around
the 4.03 level where we can also find the 38.2% Fibonacci retracement level
for confluence. This is
where we can expect the buyers to step in with a defined risk below the level
to position for a rally into new highs. The sellers, on the other hand, will
want to see the price breaking lower to invalidate the bullish setup and
position for a drop into the trendline.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
latest move higher has been diverging with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we are getting a pullback into the base of the
divergent formation around the 4.03 level where the buyers will look for a
bounce and another rally. The sellers, on the other hand, will want to see the
price breaking lower to confirm the reversal and position for a drop into the
trendline.

Upcoming Events

Today we have the FOMC rate decision where the Fed
is expected to keep rates unchanged. Tomorrow, we conclude with the latest US
PMIs and Jobless Claims figures. Weak data is likely to weigh on Copper, while
strong figures should give it a boost.

This article was written by FL Contributors at www.forexlive.com.