Copper recently bounced on a key support zone as the upward trend remained intact. In fact, the Chinese PMIs showed a strong improvement and the US ISM Manufacturing PMI jumped into expansion for the first time since 2022. The PBoC is expected to deliver more policy support this year while the other central banks continue to foresee the first rate cuts in the near future. The pickup in economic activity and the dovish central banks should support the market until we get some slowdown, or the central banks turn back hawkish.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper bounced from the key support zone around the 3.98 level where we had the confluence of the trendline, the 50% Fibonacci retracement level and the red 21 moving average. The target for the buyers should be the 4.18 high with a breakout as the ultimate goal. The sellers will likely step in around the high with a defined risk above it to position for a drop into the trendline targeting a break below it.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, late buyers will have a much better risk to reward setup around the trendline where they will also find the confluence of the broken counter-trendline and the 61.8% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking below the major trendline to invalidate the bullish setup and position for a drop into new lows.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been diverging with the MACD recently which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we have a rising channel defining the current uptrend with the red 21 moving average for extra support. The buyers should keep on stepping in around the lower bound of the channel with a defined risk below it to position for a rally into the highs. The sellers, on the other hand, will want to see the price breaking lower to position for a break below the major trendline with a better risk to reward setup.
Upcoming Events
Today we have the US ADP and the US ISM Services PMI. Tomorrow, we get the latest US Jobless Claims figures while on Friday we conclude the week with the US NFP report. Weak data is likely to weigh on Copper in the short term, while strong figures should give it a boost.
