Copper erased quickly all the gains from the PBoC RRR cut announcement as the mood in the Chinese stock market dwindled. In fact, we’ve been seeing a correlation lately with the Chinese stock market as that’s what has been driving the sentiment and what the market sees as an important part for economic growth. In the big picture, Copper continues to remain supported amid a reacceleration in the US economy, but it looks like it will need stronger actions from the Chinese officials to start moving to the upside sustainably.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper bounced from the key support around the 3.73 and extended the rally into the 3.95 level following the PBoC RRR cut and expectations for more easing measures. Unfortunately, the positive sentiment didn’t last long, and the market turned around erasing all the gains.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the latest leg higher diverged with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a complete reversal once the price broke below the trendline and the sellers piled in to target the 3.73 support.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the recent consolidation formed what looks like an ascending triangle. The price can break on either side of the pattern but what follows next is generally a strong and sustained move in the direction of the breakout. This gives us two clear possible scenarios:
- A break to the upside should see the buyers stepping in to position for a rally into new highs.
- A break to the downside is likely to see the sellers increasing the bearish bets into the 3.73 support.
Upcoming Events
This week is basically empty on the data front with just the latest US Jobless Claims figures tomorrow being the only notable release. Strong data should support the market while weak figures are likely to weigh in the short term.
