The recent breakout of the
symmetrical triangle led to a fall into the key support around the 3.54 level.
The causes are the tighter monetary conditions that are leading to a slowdown
in global growth. Moreover, in the past weeks we also had some risk aversion
due to falling equity prices and rising global yields and US Dollar. More
recently, Copper bounced as Chinese data started to show some improvement as
the PMIs improved amid easing measures from Chinese
officials. Yesterday, we got another news that China is considering new stimulus to meet the growth target, which
should further support Copper prices.
Copper Technical Analysis –
Daily Timeframe
Copper Daily
On the daily chart, we can see that after the
breakout of the symmetrical triangle, Copper
fell to the key support around
the 3.54 level where it bounced as the buyers stepped in with a defined risk
below the level to position for a rally. The symmetrical triangle might now
turn into a descending triangle, so the 3.54 support and the top major trendline will be
key levels to watch from now on.
Copper Technical Analysis –
4 hour Timeframe
Copper 4 hour
On the 4 hour chart, we can see that Copper bounced
on the 3.54 support and rallied into the 3.68 level before pulling back into
the 61.8% Fibonacci retracement level
and resuming the rally. The market structure on this timeframe is bullish as
the price has printed a new higher high and the moving averages have
crossed to the upside. The first target for the buyers should be the minor
downward trendline around the 3.74 level where the sellers are likely to step
in to target a selloff into the 3.54 support.
Copper Technical Analysis –
1 hour Timeframe
Copper 1 hour
On the 1 hour chart, we can see that we
had a divergence with
the MACD right
into the key support which is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, we got a reversal, and the
buyers are now in control. On a more short-term basis, we might see the buyers
leaning on the recent swing low around the 3.64 level where we have the confluence with
the red 21 moving average. More conservative buyers might want to wait for the
price to take out the recent high before joining the rally. The sellers, on the
other hand, will want to see the price breaking below the recent swing low to target
another drop into the 3.54 support.
Upcoming Events
This week the market is likely to focus on the US CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report. Copper is
likely to react more to elevated Core CPI figures as they might lead to more
Fed tightening or ugly Jobless Claims data as that might signal a recession on
the horizon.