Comex High Grade Copper Price Futures (HG) Technical Analysis – Dollar-denominated Copper Plunges after Fed Rate Hike

July Comex High Grade Copper prices retreated early in the session ahead of the Fed announcements on Wednesday, but plunged even further after the central bank raised its benchmark interest rate 25-basis points. The news underpinned the U.S. Dollar which helped pressure demand for dollar-denominated copper.

Early in the session, copper prices were propped up by data from China which showed the economy generally remained on solid footing and industrial output beat expectations in May. Early gains were limited by concerns over supply and worries over China’s tighter monetary policy and a cooling housing market and slower investment. All three factors are expected to limit growth and slowdown its momentum.

Technically, the main trend is up according to the daily swing chart, however, momentum has been trending lower since the main top at $2.6520 was formed on June 9.

The short-term range is $2.5155 to $2.6520. The market is currently straddling its retracement zone at $2.5840 to $2.5675. Trader reaction to this zone will likely determine the near-term direction of the market.

A sustained move under $2.5675 could continue to attract further shorting pressure on Thursday. This could create enough downside momentum to challenge the December 30, 2016 close at $2.5180 and the last main bottom at $2.5155.

Holding inside $2.5840 to $2.5675 will indicate investor indecision. Overtaking $2.5840 will signal the return of buyers.

The inability to sustain last week’s spike to the upside suggest the fundamentals are still too weak to attract new buyers at current price levels. It’s probably going to take a combination of a weaker U.S. Dollar and stronger data from China to turn this market around.