Copper Technical Analysis | Forexlive

Ever since the rumors/news
of China’s reopening emerged in November 2022, Copper has witnessed a strong
rally. The market anticipated increased demand for the metal, considering
China’s status as the largest importer and consumer of copper worldwide.
However, these expectations began to wane due to ongoing disappointments in
China’s factory recovery, with copper imports even declining in the first
quarter of 2023. Additionally, a global manufacturing slump is evident as
numerous Manufacturing PMIs continue to contract.

As a result, the
“China reopening trade” has been unwinding, and we are now almost
back to the levels seen in November 2022. Recently, copper has shown a rebound
in response to more positive news from China and the potential for further
economic stimulus given that inflation in China keeps falling and it’s
threatening to turn into deflation. Nevertheless, the overall outlook remains
bearish at present, although technical indicators can assist in navigating
various scenarios.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, copper has recently bounced
from a strong trendline and even
broke out of a downward one leading to an extension to the 3.8245 resistance. The moving averages have
crossed to the upside in a possible sign that the trend may be changing. The
buyers will need to break this resistance to then target the swing high at
4.1845. The sellers, on the other hand, may lean on this resistance to target
the 3.5475 support.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can notice a divergence with the
MACD right
when copper is trading at the resistance level. This may be a sign of an
incoming pullback or reversal. In such a case, the buyers should lean on the
upward trendline with defined risk below it to target the breakout of the
resistance. The sellers, on the other hand, will want to see the price to break
the trendline to pile in and extend an eventual selloff into the 3.5475
support.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the short term price action and the divergence going on into the
resistance level. This may even be a rising wedge which
would have the 3.6950 as target and thus lead to a bigger selloff.
Nevertheless, the levels to watch are the 3.8245 resistance and the upward
trendline. A breakout on either of those should lead to more momentum.