Copper continued to trade within a symmetrical triangle for months as the uncertainty on the global economy kept both buyers and sellers at bay. The recent more hawkish than expected FOMC dot plot might have given the market a wakeup call that the central banks will keep monetary conditions tight as long as necessary to cause a significant deceleration in economic growth and bring inflation back to target. The higher energy prices are also likely to weigh on the global economy and lead to a quicker deceleration in growth.
Copper Technical Analysis – Daily Timeframe
On the daily chart, we can see that Copper eventually broke out of the symmetrical triangle it was stuck into for months. This breakout opened the door for a fall into the key support around the 3.54 level where we can expect the buyers to step in with a defined risk below the support to position for a rally into the downward trendline around the 3.70 level. Until then, the sellers should remain in control.
Copper Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have the low around the 3.64 level acting as support. If we get a bounce here, the sellers are likely to lean on the minor downward trendline where we have the confluence with the red 21 moving average. The buyers, on the other hand, will want to see the price breaking above the trendline to position for a rally back into the broken upward trendline around the 3.75 level.
Copper Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another short term downward trendline that is acting as resistance. The sellers are leaning on this trendline targeting a break below the 3.64 support. If we do get a breakout, we should see even more sellers piling in and probably lead to a selloff into the 3.54 level. A break above this short term, should see the price rallying into the trendline around the 3.70 level.
Upcoming Events
This week is pretty bare on the data front and the only report that might weigh on Copper looks to be the US Jobless Claims tomorrow. Strong readings are likely to keep Copper supported in the short term, while weak figures might weigh on sentiment and demand outlook and drag Copper prices lower.
