The weakening global growth
and the deteriorating Chinese economic data keep on weighing on Copper putting
a lid on any rally. The Chinese authorities seem to be stepping up their policy
support for the economy, so the market finds itself between bad and good news.
This uncertainty has led to a consolidation, with the price action forming a
symmetrical triangle. Fundamentally, the big picture is mixed but more skewed
to the downside, so the technicals will be helpful as a breakout on either side
might point into the right direction.
Copper
Technical Analysis – Daily Timeframe
Copper Daily
On the daily chart, we can see that Copper
continues to trade within a symmetrical triangle. The
latest leg higher got rejected from the top trendline and we
should see the price now falling into the bottom trendline. Eventually, a
breakout should give an amazing opportunity for the buyers or sellers as
momentum generally picks up and the following moves are strong and sustained,
so watch out for that.
Copper Technical Analysis –
4 hour Timeframe
Copper 4 hour
On the 4 hour chart, we can see that the latest leg
higher was also diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we should see the price falling back into the bottom
trendline where we can also find the 61.8% Fibonacci retracement level
and the previous swing low support. This is
where we can expect the buyers to pile in again and ride the expected rally
into the top trendline.
Copper Technical Analysis –
1 hour Timeframe
Copper 1 hour
On the 1 hour chart, we can see that the
sellers leant on the resistance zone around the 3.8450 level to position for a
fall into the trendline around the 3.76 level. A break below the low at 3.8230
should see more sellers piling in and drive Copper into the support zone. The
buyers, on the other hand, will need the price to break above the resistance at
3.8450 to try another rally into the top trendline and eventually a breakout.
Upcoming Events
This week is a bit empty on the data front with just the
US ISM Services PMI today and the US Jobless Claims tomorrow being the main
highlights. If we see strong data, the market is unlikely to price an imminent
recession and thus it shouldn’t affect Copper too much. On the other hand, weak
data should bring back recessionary fears and likely trigger some risk aversion
in the markets eventually weighing on Copper.
