Copper extended the rally into new highs following some positive Chinese data. Moreover, the PBoC Governor Pan recently signalled more monetary policy support to come which should be a tailwind for the market as long as the global growth impulse of the last few months remains intact. The central banks continue to support rate cuts this year although the timing got pushed back a little after a series of higher-than-expected inflation prints. That could raise the risk of a recession, so it will be something to watch out for in the next few months.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper had an incredible rally and it’s now pulling back. In fact, the price was very overstretched at some point as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a key support around the 4.03 level where we can also find the 38.2% Fibonacci retracement level for confluence. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the trendline.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest move higher has been diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we are getting a pullback into the base of the divergent formation around the 4.03 level where the buyers will look for a bounce and another rally. The sellers, on the other hand, will want to see the price breaking lower to confirm the reversal and position for a drop into the trendline.
Upcoming Events
Today we have the FOMC rate decision where the Fed is expected to keep rates unchanged. Tomorrow, we conclude with the latest US PMIs and Jobless Claims figures. Weak data is likely to weigh on Copper, while strong figures should give it a boost.
