Copper Technical Analysis

Copper continues to be
supported by favourable fundamentals although the latest rally is starting to
look a bit exhausted. The supporting factors include the recent beat in the Chinese PMIs and the US ISM Manufacturing PMI, with the latter jumping into
expansion for the first time since 2022. Moreover, we have the PBoC expected to
deliver more policy support this year while the other central banks continue to
foresee rate cuts at some point although they are willing to keep rates higher
for longer if needed. The current environment should be good for growth, so the
things to watch will be signs of marked deceleration in growth indicators or
increased risks of rate hikes.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper has been
struggling to break the key 4.35 level. From a risk management perspective, the
buyers will have a much better risk to reward setup around the 4.18 level where
we can also find the confluence of the 50%
Fibonacci retracement level,
the red 21 moving average and the trendline. The
sellers, on the other hand, will likely step in around these levels to position
for a drop into the trendline and eventually target a break below it.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target for the pullback would come right around
the base of the divergent formation near the 4.18 support,
although the price will need first to break below the black minor trendline to
confirm it.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price rejected the 4.35 level and it’s now falling back to the minor trendline.
The buyers will have another opportunity to step in around the trendline to
position for a break above the 4.35 resistance. If the price were to break lower
though, the sellers will gain control and take the price into the 4.18 support.

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