Copper Technical Analysis

Copper has been on a
retreat since last week as the US Dollar strength coupled with year-end flows
might have weighed a bit on the market. The sentiment around the Chinese
economy remains weak and the recent data from the US doesn’t look good either.
In fact, yesterday the inside data of the US ISM Manufacturing PMI report painting a weaker picture
compared to the headline beat and the upbeat comments. Moreover, the US Job Openings missed expectations with the hiring
rate now below the pre-pandemic levels which could be a bad omen.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper is
bouncing near a key trendline where we
can also find the confluence with the
Fibonacci retracement levels and the
red 21 moving average. This is
where the buyers are stepping in with a defined risk below the trendline to
position for a rally into the 4.03 resistance.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
bounce around the trendline as we have a strong support zone with many
technical confluences. The sellers will want to see the price breaking below
the trendline to invalidate the bullish setup and position for a drop back into
the 3.55 support.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD
falling into the key trendline. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. We can also notice that the recent
downtrend got broken after the price breached the trendline. The buyers should
have even more conviction for a rally now while the sellers will need to wait
for the price to break below the key trendline.

Upcoming Events

Today we will have another slate of US labour market
data with the release of the US ADP and Jobless Claims figures. Tomorrow, we
conclude the week with the NFP report and the ISM Services PMI. Weak data is
likely to weigh on Copper due to lower future demand fears while strong data
should keep the market supported.

This article was written by FL Contributors at

Go to Forexlive

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