Fundamental Overview
Copper has been on a sustained downtrend since reaching its peak in May. A lot of the weakness has been attributed to the struggling economic recovery in China.
Copper is sensitive to the manufacturing cycle, and after a pickup in the first half of the year, we’ve been seeing a notable pullback as tight monetary policy continued to weigh.
That could reverse in the next months as the Fed is finally starting its easing cycle today. A 50 bps cut would be better in the bigger picture as it would indicate that the Fed wants to get ahead. More easing from the Chinese officials would also boost the copper market.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that copper broke above the major trendline and after a retest, rallied back to the 4.32 level. This level is acting as a strong resistance. We can expect the sellers to step in here with a defined risk above the level to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 4.70 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 increase the bearish bets into new lows.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action has been rangebound between the 4.25 support and the 4.32 resistance. The buyers will want to see the price breaking to the upside to increase the bullish bets into new highs, while the sellers will look for a break lower to position for a drop into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we have the FOMC Rate Decision and tomorrow, we get the latest US Jobless Claims figures.
