The recession in the manufacturing sector in the biggest economies in the world has been weighing on the Copper price. The lack of economic stimuli coupled with low demand and restrictive monetary policies, suggest that we may see even lower prices going forward. In the short term though, China might start to stimulate its economy much more given the risk of deflation, so we might see stable or higher prices going forward.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper got rejected from the 3.9575 resistance where we had also the 61.8% Fibonacci retracement level for confluence. The strong selloff led to a downside crossover of the moving averages which points to a bearish bias. We can notice that the sellers are now leaning on that red 21 moving average and the 3.8245 resistance to position for more downside. A strong break above the 3.8245 level should invalidate the bearish setup.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have also the 50% Fibonacci retracement level at the 3.8245 resistance. This makes that resistance zone a strong level and a break above the 61.8% Fibonacci retracement level would entirely invalidate the bearish setup. In fact, we can notice that the black trendline forms an ascending triangle pattern with the resistance, so a break on either side should lead to a sustained move in the direction of the breakout.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is basically ranging within the ascending triangle. The best strategy would be to sit and wait for a breakout on either side supported by a fundamental catalyst and then go with the flow.
Upcoming Events
Today we have the US CPI report which is expected to be a pivotal release for the upcoming FOMC rate decision and especially for the following ones. A miss to the expectations should be risk positive and support Copper going forward, while a beat should lead to a risk off mood in the markets and send the Copper price lower. After the CPI we have the US Jobless Claims report on Thursday and the University of Michigan Consumer Sentiment report on Friday.
