The breakout of the
triangle is a signal that the global economy might be headed for a downturn as
the central banks keep monetary conditions tight. The fast rise in energy
prices might have also accelerated such an outcome as consumption should have
suffered from it. We have also other markets heading towards a negative outcome
as global yields continue to soar, the US Dollar appreciates every day and
the stock markets are experiencing losses.
Copper Technical Analysis –
Daily Timeframe
Copper Daily
On the
daily chart, we can see that after the breakout of the symmetrical triangle, Copper
pulled back to retest the broken trendline, where
we had also the red 21 moving average for confluence, and
sold off again targeting the 3.54 support. We
might see a bounce around the support level as the buyers are likely to step in
with a defined risk below the level to target a rally into the upper trendline
of the triangle. The sellers, on the other hand, will want to see the price
breaking through the support to increase the bearish momentum and start eyeing
the cycle lows.
Copper Technical Analysis –
4 hour Timeframe
Copper 4 hour
On the 4 hour chart, we can see that we even had
another downward trendline around the bottom trendline of the triangle that
added an extra layer of confluence. That’s where the sellers piled in with a
define risk above the trendline to target the 3.54 support. Right now, the
price is in free fall, and we might not see much support until the 3.54 level,
so the buyers are likely to be careful not to catch such a falling knife.
Copper Technical Analysis –
1 hour Timeframe
Copper 1 hour
On the 1 hour chart, we can see that the
price is starting to diverge with
the MACD right
as it trades into the key support level. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, we might see
the buyers stepping in with conviction around the support level to target the
3.64 resistance. The sellers, on the other hand, are likely to pile in around these
levels to position for a break below the support. If the price breaks above the
3.64 resistance as well, then the buyers should have free way until the major
trendline around the 3.75 level.
Upcoming Events
Today on the agenda we have the ADP report and the
ISM Services PMI. Tomorrow, we will see the latest Jobless Claims data, which
continues to show a solid labour market. Finally on Friday, it will be the time
for the NFP report which is the only one the Fed will see before its next rate
decision. Copper is likely to respond negatively to bad data and positively in
case of good figures.