Fundamental Overview
Copper experienced a pretty strong selloff this week with market participants blaming the soft Chinese economic data and the increase in inventories in most global warehouses suggesting some weak demand.
In the big picture, stable global growth and major central banks cutting rates into resilient economies should be bullish drivers for the copper market but more expansionary policies from Chinese officials would give a stronger support for prices.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that copper eventually erased all the gains from the first week of July and dropped back to the key 4.35 support where we have also the 50% Fibonacci retracement level for confluence.
This is where we can expect the buyers to step back in with a defined risk below the support to position for a rally back into the 4.67 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 4.00 level next.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we might even form a range here between the 4.35 support and the 4.67 resistance. There’s not much else we can glean from this chart as the market participants might keep on “playing the range” until we get a breakout on either side.
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 the resistance.
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 support. The red lines define the average daily range for today.
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