The weakness in the global manufacturing sector and especially in the Chinese economy have been weighing a lot on Copper prices. We had a good rally after the Chinese inflation data raised the risks of deflation in China and the market expected more easing measures from the central bank. Unfortunately, those expectations were wrong and the PBoC didn’t do anything on the rates front causing a disappointment in the market and another selloff. On Monday, China pledged more stimulus to support the economy and Copper prices rallied consequently.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that after the news of more stimulus coming from China, Copper rallied again all the way back to the key 3.9575 resistance where we have also the 61.8% Fibonacci retracement level. The buyers will need the price to break above this strong level to get the conviction for more upside and target the 4.1855 swing level.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the first try of a breakout failed and the price got rejected from the resistance as the sellers stepped in to position for another low. We can notice that the price action is forming a major ascending triangle pattern. The price can break on either side of such patterns, but what follows a breakout is generally a strong move. So, this is something to watch out for.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is testing a strong support level where we have the previous swing high level and the 38.2% Fibonacci retracement level. The buyers may lean on this level with a defined risk below to target the breakout. The sellers, on the other hand, will want to see the price breaking lower to pile in and extend the fall into the 3.8245 support.
Upcoming Events
The most likely report that can move the market will be the US Jobless Claims on Thursday. The data needs to deviate notably from the expected figures though as numbers more or less in line with expectations are unlikely to be market moving. Anyway, a big miss should weigh on Copper as the market may get some recessionary vibes, while a big beat should support the Copper prices as the soft-landing narrative would remain intact.
