Copper Technical Analysis

Copper recently bounced on
a key support zone as the upward trend remained intact. In fact, the Chinese
PMIs showed a strong improvement and the US
ISM Manufacturing PMI jumped into expansion for the first time since 2022. The
PBoC is expected to deliver more policy support this year while the other
central banks continue to foresee the first rate cuts in the near future. The
pickup in economic activity and the dovish central banks should support the
market until we get some slowdown, or the central banks turn back hawkish.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper bounced
from the key support zone
around the 3.98 level where we had the confluence of the trendline, the 50%
Fibonacci retracement level
and the red 21 moving average. The
target for the buyers should be the 4.18 high with a breakout as the ultimate
goal. The sellers will likely step in around the high with a defined risk above
it to position for a drop into the trendline targeting a break below it.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, late buyers will have a much better risk to reward
setup around the trendline where they will also find the confluence of the broken
counter-trendline and the 61.8% Fibonacci retracement level. The sellers, on
the other hand, will want to see the price breaking below the major trendline
to invalidate the bullish setup and position for a drop into new lows.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the price
has been diverging with
the MACD recently
which is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we have a rising channel defining the current uptrend
with the red 21 moving average for extra support. The buyers should keep on
stepping in around the lower bound of the channel with a defined risk below it
to position for a rally into the highs. The sellers, on the other hand, will
want to see the price breaking lower to position for a break below the major
trendline with a better risk to reward setup.

Upcoming Events

Today we have the US ADP and the US ISM Services
PMI. Tomorrow, we get the latest US Jobless Claims figures while on Friday we
conclude the week with the US NFP report. Weak data is likely to weigh on
Copper in the short term, while strong figures should give it a boost.

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