On the daily chart below, we can see that since the China reopening rumours/news back in November 2022, Copper has been rallying strongly as the market expected more demand for the metal considering also that China is the world’s largest copper importer and consumer. Those expectations started to ebb as China’s factory recovery kept on disappointing and China’s copper imports even fell in the first quarter of 2023. We are also experiencing a global manufacturing slump and today’s China Manufacturing PMI doesn’t brighten the picture.
All of the above, contributed to an unwind of the “China reopening trade” and we are now almost back at where we were back in November 2022. We can see that copper has bounced recently on the major trendline and swing low support at $3.5475 but the bias remains skewed to the downside.
Copper Technical Analysis
On the 4 hour chart below, we can see that the last selloff into the $3.5475 support diverged with the MACD. This is generally a sign of weakening momentum and it’s often followed by pullbacks or reversals. It looks like copper indeed pulled back towards the downward trendline but might not reach it given today’s China Manufacturing PMI report.
If the price manages to rally though, the next resistance would be the swing high at $3.7760 which should be the last line of defence for the sellers as a further upside move should change the overall trend. A break below the key $3.5475 support would open the door for a bigger fall into the $3.23 region.
On the 1 hour chart below, we can see that we have a support zone at the $3.63 level. There’s also the 50% Fibonacci retracement level for confluence and a possible double bottom. The buyers are likely to lean on this level with a defined risk below it and the $3.7760 resistance as target.
More conservative buyers may want to wait for the price to take out the last swing high at $3.6705 before piling in. The sellers, on the other hand, will want to see the price breaking lower to jump onboard and extend the fall towards the $3.5475 support aiming for a breakout and new lower lows next.
