The copper market remains in a tight spot amid uncertainties about global growth, tensions in the Middle East and improving activity data from China. This is leading to a rangebound price action within a descending triangle until something big happens triggering a breakout. Given the resilient US economic data and improving Chinese figures we might see a rebound in prices in the short term, but watch out for recessionary signs as tight monetary conditions and higher energy prices might weigh even more on the global economy going forward.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper yesterday broke through the key support zone around the 3.55 level but bounced back soon after leaving behind a fakeout. The buyers stepped in more aggressively and took the price into the red 21 moving average. From a risk management perspective, the sellers will be better off waiting for the price to come back into the downward trendline around the 3.75 level where they will have a much better risk to reward setup.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the break through the support diverged with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might see a reversal back into the previous swing high around the 3.68 level where we can find the confluence with the minor downward trendline and the 61.8% Fibonacci retracement level.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the fakeout below the support zone and the strong rally afterwards. From a risk management perspective, the buyers would be better off waiting for the price to pull back into the 38.2% Fibonacci retracement level before piling in for another rally into the 3.68 resistance.
Upcoming Events
Tomorrow we will get the latest US Jobless Claims report and the market will want to see if the miss in Continuing Claims last week was just a blip or the start of a trend. Later in the day we will also hear from Fed Chair Powell where the market will be focused on any hint about the near-term policy outlook. Copper is likely to get under pressure if the Jobless Claims data misses expectations by a big margin or Fed Chair Powell sounds very hawkish.