Fundamental
Overview
The price action
in copper remains choppy as the market continues to question Chinese economic
growth and stimulus. On the other hand, we have also Trump’s victory and fears
of a trade war.
Copper has been tightly
correlated to the Chinese stock market in recent years which just shows the strong
dependence of the commodity to the Chinese economy. That should not be
surprising given that China is responsible for more than 60% of global copper demand.
The recent data
out of China did show a little improvement even though it’s too early to draw
conclusions. On the other hand, Trump will likely focus first on tax cuts and
domestic issues rather than going berserker on tariffs.
Overall, the
picture is more bullish than bearish for the copper market but the mixed
signals will likely keep the momentum at bay until we get some key technical breakout
or strong catalyst to trigger a more sustained trend.
Copper
Technical Analysis – Daily Timeframe
Copper Daily
On the daily chart, we can
see that copper bounced near the trendline
as the buyers stepped in with a defined risk below it to position for a rally
into the key 4.69 resistance.
The sellers will want to see the price breaking below the trendline to increase
the bearish bets into the next major trendline around the 3.90 level.
Copper Technical
Analysis – 4 hour Timeframe
Copper 4 hour
On the 4 hour chart, we can
see that we have mostly a rangebound price action between the trendline and the
resistance. There’s not much we can glean from this timeframe so we need to zoom
in to see some more details.
Copper Technical
Analysis – 1 hour Timeframe
Copper 1 hour
On the 1 hour chart, we can
see that we have a minor resistance zone around the 4.37 level. The buyers will
want to see the price breaking higher to target a rally into the 4.69
resistance, while the sellers will likely lean on it to position for a drop
back into the trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
This week is a bit empty on the data front with the most important releases
scheduled for the latter part of the week. On Wednesday, we have the US CPI
report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we
conclude the week with the US Retail Sales data.