The recent breakout of the symmetrical triangle led to a fall into the key support around the 3.54 level. The causes are the tighter monetary conditions that are leading to a slowdown in global growth. Moreover, in the past weeks we also had some risk aversion due to falling equity prices and rising global yields and US Dollar. More recently, Copper bounced as Chinese data started to show some improvement as the PMIs improved amid easing measures from Chinese officials. Yesterday, we got another news that China is considering new stimulus to meet the growth target, which should further support Copper prices.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that after the breakout of the symmetrical triangle, Copper fell to the key support around the 3.54 level where it bounced as the buyers stepped in with a defined risk below the level to position for a rally. The symmetrical triangle might now turn into a descending triangle, so the 3.54 support and the top major trendline will be key levels to watch from now on.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Copper bounced on the 3.54 support and rallied into the 3.68 level before pulling back into the 61.8% Fibonacci retracement level and resuming the rally. The market structure on this timeframe is bullish as the price has printed a new higher high and the moving averages have crossed to the upside. The first target for the buyers should be the minor downward trendline around the 3.74 level where the sellers are likely to step in to target a selloff into the 3.54 support.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we had a divergence with the MACD right into the key support which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a reversal, and the buyers are now in control. On a more short-term basis, we might see the buyers leaning on the recent swing low around the 3.64 level where we have the confluence with the red 21 moving average. More conservative buyers might want to wait for the price to take out the recent high before joining the rally. The sellers, on the other hand, will want to see the price breaking below the recent swing low to target another drop into the 3.54 support.
Upcoming Events
This week the market is likely to focus on the US CPI report as that’s what might change the expectations around the next FOMC rate decision. Today, we will see the US PPI data and later in the day the FOMC Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at the same time we will also get the latest Jobless Claims figures. On Friday we conclude the week with the University of Michigan Consumer Sentiment report. Copper is likely to react more to elevated Core CPI figures as they might lead to more Fed tightening or ugly Jobless Claims data as that might signal a recession on the horizon.
