Copper retreated from the highs as the market will likely want to retest the previous resistance now turned support before continuing higher. On the fundamental side, not much has changed as the central banks are still intentioned to deliver the first rate cuts with the PBoC maintaining its dovish language. The recent economic data has been showing resilient growth and the leading indicators started to turn higher as the expectations of rate cuts boosted economic sentiment. As long as the current theme remains in place, we can expect the market to trend higher.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper is now near a key support zone around the 3.98 level where we can find the confluence of the trendline, the 50% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into new highs. 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 3.70 level.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the bullish setup around the support zone where the buyers will look for a bounce and the sellers for a break. If we do get a bounce, the sellers will likely lean on the downward trendline where they can position for a break below the major trendline with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking above the downward trendline to increase the bullish bets into new highs.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is starting to diverge with the MACD as it approaches the key support zone. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it could be another bullish signal for the buyers and should give them more confidence to pile in around these levels. If the price were to break lower though, it will be an even stronger signal of a continuation of the downtrend and we can expect the bearish momentum to increase.
Upcoming Events
Today we have Fed’s Waller speaking where the market will want to see if he sounds hawkish after the recent economic data. Tomorrow, we get the latest US Jobless Claims figures, while on Friday we conclude with the US PCE and Fed Chair Powell. Weak data is likely to weigh on Copper, while strong figures should give it a boost.
