The manufacturing sector has been contracting
basically all over the world with the biggest economies like US, China and
Eurozone being the highlights. We had recently a rally in copper prices due to
the expectations of more economic stimulus from China, but the market got
disappointed from the weak actions and it’s erasing the entire rally since the
beginning of June. As long as the central banks continue to tighten monetary
conditions and the global economy keeps on slowing down, we can expect lower
and lower prices for copper.
Copper Technical Analysis –
Daily Timeframe
Copper Daily
On the daily chart, we can see that the rally that
started from the bounce on the major trendline and the
3.54 support seems to
have ended at the 3.9575 resistance where we had also confluence from the
61.8% Fibonacci retracement level.
Copper sold off pretty heavily and the moving averages crossed
to the downside possibly signalling a restart of the downtrend. The target
should now be the major trendline and the 3.54 support below. A break below the
3.54 support would open the door for a big fall into the 3.14 low.
Copper Technical Analysis –
4 hour Timeframe
Copper 4 hour
On the 4 hour chart, we can see that the price
started to roll over as soon as it broke out of the rising channel. The recent
pullback seems to have ended at the 38.2% Fibonacci retracement level of the
entire drop. The buyers will need the price to break above the 3.8250 resistance
to get back some conviction and pile in for a new higher high above the 3.95
level.
Copper Technical Analysis –
1 hour Timeframe
Copper 1 hour
On the 1 hour chart, we can see that we
have a key support zone at the 3.7550 level. We can expect more sellers piling
in in case the price breaks below the support and target the 3.62 level. On the
other hand, the buyers may lean on this support with a defined risk below it to
target the breakout of the 3.8250 resistance.
Upcoming Events
We will have some important economic
indicators in the next few days like the US Jobless
Claims and the ISM Services PMI tomorrow and the US NFP report on Friday. Weak
data, especially in the NFP report should bring recessionary fears back into
the market and lead to more downside for copper.