Copper Technical Analysis | Forexlive

Since the
China reopening rumours/news back in November 2022, Copper has been rallying
strongly as the market expected more demand for the metal considering also that
China is the world’s largest copper importer and consumer. Those expectations
started to ebb as China’s factory recovery kept on disappointing and China’s
copper imports even fell in the first quarter of 2023. We are also experiencing
a global manufacturing slump as many Manufacturing PMIs keep falling deeper
into contraction.

All of
the above, contributed to an unwind of the “China reopening trade” and we are
now almost back at where we were back in November 2022. We can see that copper
has bounced recently as we started to get more bullish news from China and
possibly more economic stimulus to come soon. Nevertheless, the big picture bias
remains bearish at the moment, but the technicals can help to navigate the
different scenarios.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, copper has recently bounced
from the upward trendline and even
broken out of the downward trendline showing some strong bullish momentum. The moving averages have
crossed to the upside and we are now seeing some struggle at a swing high
resistance.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, the divergence with the
MACD we’ve
highlighted last week worked out pretty perfectly as the price rallied to the
swing high target at 3.7765. The moving averages are acting as dynamic support
and we have a new minor upward trendline that could offer an entry point for
the buyers. The 3.7765 resistance may be strong enough to offer a deeper
pullback into the trendline where the buyers will be waiting to target the
3.9410 resistance.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have an ascending triangle as the
price keeps printing higher lows trading into the 3.7765 resistance zone. If we
see copper breaking higher, the buyers should pile in more aggressively and
extend the rally to new highs. If the breakout fails though, we can expect the
buyers to lean on the 3.69 support area where we find the confluence of the
trendline, previous resistance turned
support and the 61.8% Fibonacci
retracement level.

The sellers, on the other hand, are likely
to lean on this 3.7765 resistance zone to target the 3.69 support zone first
and a breakout of the trendline next where we can expect even more sellers to
pile in and extend the selloff into the 3.5475 low, if not lower.