Fundamental Overview
Copper has been rallying like crazy in the past few months amid a pickup in global growth, Chinese stimulus measures and concerns over tightness in global mine supply. Unfortunately, as it’s often the case, the rally attracted the momentum players and the price got overstretched leading to an aggressive selloff without a clear catalyst.
All else being equal, if we keep seeing positive economic growth and maintain the risk-on sentiment, we could see new highs in the months ahead with the Chinese officials likely increasing the policy support if the data were to show some deceleration.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that copper experienced an aggressive correction to the downside after setting a new all-time high. The price bounced and consolidated on the trendline where we have also the 61.8% Fibonacci retracement level for confluence.
This is where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 4.47 level.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the consolidation between the trendline and the 4.85 level. A breakout to the upside should see the buyers gaining more conviction and increase the bullish bets into a new all-time high. On the other hand, a breakout to the downside will likely trigger another selloff with the sellers aiming for the 4.47 level as the first target.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see even better the current rangebound price action between the 4.75 support and the 4.85 resistance. Note that we have another support at 4.70, so if we were to see the price dropping below the 4.75 support it wouldn’t yet signal more downside to come.
Upcoming Catalysts
Today we get the US Consumer Confidence report where the focus will likely be on the labour market details. On Thursday, we will see the latest US Jobless Claims figures. Finally on Friday, we conclude the week with the Chinese PMIs and the US PCE report.
