Copper continues to be tightly correlated with what happens in China. In fact, we saw strong rallies following news of more policy support from the Chinese authorities, but the ugly economic data eventually prevailed on the sentiment and led to a big selloff. Yesterday, the PBoC finally decided to cut rates but Copper sold off even more. The market may have wanted more as the rate cut was followed by another set of very weak data.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that since the fakeout at the 3.9575 resistance, Copper just kept on falling with very shallow pullbacks along the way. The price now sits at a key trendline that acted as support previously and a break below it would open the door for a fall into the 3.5475 level.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Copper has been trading within a regression channel and we should expect the buyers step in here around the trendline to target a breakout of the channel and the 3.9575 resistance. The sellers, on the other hand, are likely to lean on the upper bound of the channel where we can also find the red 21 moving average as dynamic resistance to target a break below the trendline.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that Copper seems to be bottoming out at the trendline and the pullback should extend to the upper bound of the channel at least. That’s where we will find the sellers leaning on the Fibonacci retracement levels with a defined risk above the channel.
Upcoming Events
This week is a bit empty on the data front and the most important release will be the US Jobless Claims tomorrow. Readings in line with expectations shouldn’t be market moving but big deviations should offer strong reactions. In fact, in case we see a big beat, we may see a pullback in Copper but it’s likely that the hawkish expectations around interest rates will eventually prevail and push the price back lower. On the other hand, a big miss is likely to cause recessionary fears and lead to a selloff.
