Copper is still trading inside a major triangle as the fundamental outlook remains murky. The Chinese stimuli had a positive effect in the past months as the data picked up, but this week the PMIs fell again and the Manufacturing sector went back into contraction. Moreover, the economic data in other major economies like Europe is deteriorating pretty quickly as the block is falling into a recession. The US economy remains resilient for now, but recently the labour market data has started to weaken, so that is something that the market will watch carefully.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper is still trading inside the descending triangle. The latest bounce on the 3.55 support led to a rally into the minor downward trendline where the price got rejected. This where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the support aiming for a breakout. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the next major trendline around the 3.75 level.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the buyers failed to break out of the trendline on their first try as the price fell back below it. The price is now bouncing on the upward trendline where we can find the confluence with the 50% Fibonacci retracement level and the red 21 moving average. This is where the buyers should step in with a defined risk below the trendline and target a breakout. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and increase the bearish bets into the 3.55 support.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that Copper is now consolidating between the resistance around the 3.68 level and the support around the 3.66 level. A breakout on either side should lead to a strong and sustained move, so the market participants will be watching it carefully.
This week, we will get lots of tier one data points with the US labour market and the FOMC decision in focus. Today we will get the US ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate decision. Tomorrow, we will see the US Jobless Claims data, while on Friday we conclude the week with the US NFP report and the ISM Services PMI. Weak data is likely to weigh on Copper as recessionary fears will come back.