Fundamental Overview
Tonight, the PBoC announced lots of easing measures ranging from short to long term interest rates. This was the catalyst for the copper rally. Things are starting to look better for the market as we’ve also got a 50 bps cut from the Fed last week.
Central bank easing generally leads the manufacturing cycle, so we can expect global growth to pick up. All these reasons should be bullish for the market and support prices in the next months (barring a recession of course).
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that copper broke above the recent high at 4.31 and extended the rally into the 4.45 level following the PBoC stimulus announcement.
If the price pulls back to retest the 4.31 level, we can expect the buyers to step in with a defined risk below the level to position for a rally into the 4.69 level next. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the trendline around the 4.15 level.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on the trendline to position for new highs, while the sellers will want to see the price breaking lower to pile in for a drop into the major trendline.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the strong rally following the PBoC announcement overnight. We have a nice support zone around the 4.40 level where we can find the confluence of the previous resistance now turned support and a minor trendline.
If we get a pullback into the support, the buyers will likely step in to position for a rally into new highs, while the sellers will look for a break to pile in for a drop into the 4.31 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE.
