Copper Technical Analysis | Forexlive
The weakness
in the global manufacturing sector and especially in the Chinese economy have
been weighing a lot on Copper. We had a good rally last week as the Chinese
inflation data raised the risk of deflation in China and the market expected
more easing measures from the central bank. Unfortunately, these expectations
were wrong and the PBoC didn’t do anything on the rates front causing a
disappointment in the market and another selloff.
Copper Technical Analysis –
Daily Timeframe
Copper Daily
On the daily chart, we can see that Copper has
rallied back into the resistance at
3.9575 where we have also the 61.8% Fibonacci retracement level as
the market expected more easing coming from China. The disappointment though,
led to a quick selloff back into the support at 3.8245. What happens here is
likely to decide the next major move.
Copper Technical Analysis –
4 hour Timeframe
Copper 4 hour
On the 4 hour chart, we can see that the price is
already reacting to the 3.8245 support as the buyers are stepping in with a
defined risk below the level to target another rally into the 3.9575 resistance
and eventually a breakout. The sellers, on the other hand, will want to see the
price breaking below the support to pile in even more aggressively and extend
the selloff into the trendline near the
3.68 level.
Copper Technical Analysis –
1 hour Timeframe
Copper 1 hour
On the 1 hour chart, we can see that we
have in fact a divergence with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. The buyers are likely to pile in here to target the resistance, but
they will also need to break above the 3.86 swing level to confirm the bounce
and pile in even more aggressively. The sellers, on the other hand, may also
lean on the 3.86 swing level to position for a break lower with a better risk
to reward setup.
Upcoming Events
The most likely report that can move the
market will be the US Jobless Claims on
Thursday. The data needs to deviate notably from the expected figures though.
Anyway, a big miss should cause a selloff in Copper as the market will start to
fear a recession, while a big beat should support the Copper prices as the
soft-landing narrative remains intact.