Fundamental Overview
The price action in copper remains choppy as the market continues to question Chinese economic growth and stimulus. On the other hand, we have also Trump’s victory and fears of a trade war.
Copper has been tightly correlated to the Chinese stock market in recent years which just shows the strong dependence of the commodity to the Chinese economy. That should not be surprising given that China is responsible for more than 60% of global copper demand.
The recent data out of China did show a little improvement even though it’s too early to draw conclusions. On the other hand, Trump will likely focus first on tax cuts and domestic issues rather than going berserker on tariffs.
Overall, the picture is more bullish than bearish for the copper market but the mixed signals will likely keep the momentum at bay until we get some key technical breakout or strong catalyst to trigger a more sustained trend.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that copper bounced near the trendline as the buyers stepped in with a defined risk below it to position for a rally into the key 4.69 resistance. The sellers will want to see the price breaking below the trendline to increase the bearish bets into the next major trendline around the 3.90 level.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have mostly a rangebound price action between the trendline and the resistance. There’s not much we can glean from this timeframe so we need to zoom in to see some more details.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance zone around the 4.37 level. The buyers will want to see the price breaking higher to target a rally into the 4.69 resistance, while the sellers will likely lean on it to position for a drop back into the trendline. The red lines define the average daily range for today.
Upcoming Catalysts
This week is a bit empty on the data front with the most important releases scheduled for the latter part of the week. On Wednesday, we have the US CPI report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US Retail Sales data.
