Copper has been on a retreat since last week as the US Dollar strength coupled with year-end flows might have weighed a bit on the market. The sentiment around the Chinese economy remains weak and the recent data from the US doesn’t look good either. In fact, yesterday the inside data of the US ISM Manufacturing PMI report painting a weaker picture compared to the headline beat and the upbeat comments. Moreover, the US Job Openings missed expectations with the hiring rate now below the pre-pandemic levels which could be a bad omen.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper is bouncing near a key trendline where we can also find the confluence with the Fibonacci retracement levels and the red 21 moving average. This is where the buyers are stepping in with a defined risk below the trendline to position for a rally into the 4.03 resistance.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the bounce around the trendline as we have a strong support zone with many technical confluences. The sellers will want to see the price breaking below the trendline to invalidate the bullish setup and position for a drop back into the 3.55 support.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been diverging with the MACD falling into the key trendline. This is generally a sign of weakening momentum often followed by pullbacks or reversals. We can also notice that the recent downtrend got broken after the price breached the trendline. The buyers should have even more conviction for a rally now while the sellers will need to wait for the price to break below the key trendline.
Upcoming Events
Today we will have another slate of US labour market data with the release of the US ADP and Jobless Claims figures. Tomorrow, we conclude the week with the NFP report and the ISM Services PMI. Weak data is likely to weigh on Copper due to lower future demand fears while strong data should keep the market supported.
