Copper has been resilient in the past few weeks in the face of worsening PMIs in the major economies and the upticks in unemployment rates. The central banks are still resolute in keeping monetary conditions tight, so that is likely to weigh even more on growth and ultimately on Copper. On the technical side, the price is now near the upper bound of the major descending triangle, and the market participants will be interested on what happens around this level.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper is now approaching the upper bound of the descending triangle defined by the trendline around the 3.75 level. This is where the sellers are likely to step in more aggressively to position for a drop back into the 3.55 support and eventually target a break below it. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the 3.90 resistance.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Copper recently broke above the minor trendline and the buyers increased the bullish bets into the major trendline. We can also notice that the price is now diverging with the MACD right when it’s approaching the key trendline. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another layer of confluence for the bearish setup.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now trading into the key trendline within a rising channel. A break below the lower bound of the channel should see more selling pressure coming into the market with the sellers piling in to target a drop into the 3.55 support. The buyers, on the other hand, will target a break above the key trendline and the upper bound of the channel to invalidate the bearish setup and target the 3.90 level.
Upcoming Events
This week is pretty empty on the data front with just the US Jobless Claims tomorrow and the University of Michigan Consumer Sentiment on Friday being the only notable events. The market is likely to focus on the US Jobless Claims given the recent weakness in the labour market data. Strong readings are likely to support Copper, while weak figures may add even more pressure as the recessionary trade is likely to gather steam.
