Copper Technical Analysis – The bearish momentum has waned

Fundamental
Overview

Copper has bounced on a key support recently and extended the gains this
week following the Chinese
Caixin Manufacturing PMI as the survey hit the highest level since May
2021. In the last few weeks, the bearish momentum indeed appeared to be slowing
as the lower lows became shallower.

All else being equal, if we continue to see the pickup in global growth, we
could see new highs in the coming months. Indeed, more policy support from the
Chinese officials would give the market a stronger boost.

Copper Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that copper eventually bounced on the key 4.35 support where we had also the 50% Fibonacci retracement level for confluence.

That’s where the buyers stepped in
with a defined risk below the level to position for a rally into a new all-time
high. The sellers will want to
see the price breaking below the 4.35 support to get back control and increase the
bearish bets into the 4.00 level.

Copper Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have now an important level at 4.52, which is the most recent lower
high. Technically, a break above it should change the bias from bearish to
bullish and give the buyers more conviction to increase the bets into new
highs.

The sellers, on the other
hand, will likely step in around this level with a defined risk above it to
position for a drop back into the 4.35 support targeting a break below it.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline
defining the current bullish momentum. From a risk management perspective, the
buyers will have a better risk to reward setup around the trendline where they
will also find the 61.8% Fibonacci retracement level for confluence.

The sellers, on the other
hand, will want to see the price breaking lower to pile in and target a drop
below the key 4.35 support zone. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US ADP, the US Jobless Claims, the US ISM Services PMI and
the FOMC Meeting Minutes. Tomorrow is going to be a US Holiday for Independence
Day. Finally, on Friday, we conclude the week with the US NFP report.

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