Copper has been rallying steadily since last Wednesday when the Fed pivoted and unleashed a “buy everything” type of reaction in the markets. Market participants may now hope that the earlier easing from central banks could avoid a global hard landing and keep global growth steady. Moreover, there’s some hope that the Chinese deflation might lead to a stronger reaction from the PBoC with bigger rate cuts to stimulate growth. Overall, the recent developments are bullish for the Copper market but the data in the next few months will be crucial for the market.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper bounced on the 61.8% Fibonacci retracement level near the upward trendline and rallied all the way back to the previous highs. The buyers are starting to struggle a bit around these levels so we might get a retracement back to the trendline before another bullish wave. The sellers, on the other hand, are likely to step in at this resistance to position for a pullback into the trendline and upon a further break lower, target the 3.55 support.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rejection from the resistance as the sellers keep piling in for a deeper pullback. The first target should be the support zone around the 3.85 level. That’s also where the buyers might start to position for the upside with another shot at the trendline if the support was to break.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action with the latest leg higher diverging with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another confirmation for a deeper pullback, which should give the sellers even more conviction for a move lower.
Upcoming Events
This week is a bit empty on the data front as we head into the Christmas holidays. Today, we have the US Consumer Confidence report. Tomorrow, we get the latest US Jobless Claims data, while on Friday we conclude the week with the US PCE report. Weak data is likely to weigh on Copper due to demand fears, while strong figures should keep on supporting the market.
