Fundamental Overview
Copper extended the gains into the 4.68 level recently on the back of a turnaround in momentum and some positive news from the Chinese Caixin Manufacturing PMI. The price started to pull back last Friday following the US NFP report as the market started to debate whether the US will manage to achieve a soft landing, or the Fed will act too late to avoid a recession.
Today, we got the latest Chinese inflation data and it showed that the economy is still flirting with deflation. That might give the officials a reason to increase the policy support, which should be a positive driver for copper. All else being equal, if we continue to see stable global growth, we could see new highs in the coming months as major central banks ease their policies on more disinflation.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that copper eventually bounced on the key 4.35 support where we had also the 50% Fibonacci retracement level for confluence, and extended the rally into the 4.68 level. We got a pullback recently following the US NFP report and the buyers will be looking at the key levels on lower timeframes to structure their trades.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price pulled back from the 4.66 resistance and it’s now near the support around the 4.52 level where we can also find the 38.2% Fibonacci retracement level of the entire rally from the lows.
This is where we can expect the buyers to step in with a defined risk below the support to position for a break above the 4.66 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 4.35 level next.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline defining the current bearish momentum. The buyers will want to see the price breaking higher to gain more conviction and increase the bullish bets into new highs. The sellers, on the other hand, will likely keep on leaning on the trendline to push into new lows and target a break below the 4.52 support. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow is going to be the most important day of the week as we get the US CPI and the US Jobless Claims figures. On Friday, we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.
