Copper erased almost all the gains from the surprising PBoC 5-yers LPR cut. Nothing has changed though, so this could be a great opportunity for those who missed the rally to position for new highs. Overall, the data has been good, and the central banks are still looking to ease their monetary policies which should keep on supporting the commodity. As long as global growth remains resilient, we can expect the bias to remain bullish.

Copper Technical Analysis – Daily Timeframe

Copper Technical Analysis
Copper Daily

On the daily chart, we can see that Copper pulled back into the red 21 moving average. The price bounced here as the buyers started to pile in to position for another rally into new highs. We can see that we are basically in the middle of a big range between the 3.72 support and the 3.95 resistance, so we need to zoom in to see some more details.

Copper Technical Analysis – 4 hour Timeframe

Copper Technical Analysis
Copper 4 hour

On the 4 hour chart, we can see that the price yesterday broke above the downward trendline and extended the rally into the most recent higher high at 3.86 where we can also find the 38.2% Fibonacci retracement level for confluence. This is where we can expect the sellers to step in 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 invalidate the bearish setup and increase the bullish bets into the 4.00 handle.

Copper Technical Analysis – 1 hour Timeframe

Copper Technical Analysis
Copper 1 hour

On the 1 hour chart, we can see that the latest leg lower diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it led to a pullback into the 3.86 resistance. A break above the resistance should confirm the reversal and give the buyers even more conviction for a rally into new highs. The sellers, on the other hand, will want to see the price breaking below the minor upward trendline to invalidate the bullish bias and increase the bearish bets into new lows.

Upcoming Events

Today we will see the US PCE and the latest US Jobless Claims figures, while tomorrow we conclude the week with the Chinese PMIs and the US ISM Manufacturing PMI. Weak data is likely to weigh on Copper in the short term while strong figures should give it a boost.