Comex High Grade Copper Price Futures (HG) Technical Analysis – Testing Key Fibonacci Support Level

Copper is trending lower on Tuesday, pressured by a stronger U.S. Dollar, which tends to weigh on foreign demand for the dollar-denominated asset and rising inventories. However, gains may have been limited by better-than-expected industrial production data from China.

At 1517 GMT, July Comex High Grade Copper is trading $3.0575, down 0.0350 or -1.13%.

According to Reuters, stocks of copper in LME-approved warehouses are at 291,350 tonnes, up nearly 10,000 tonnes since last Thursday. Copper stocks in warehouses monitored by the Shanghai Futures Exchange are at nearly 280,000 tonnes, compared with close to 250,000 at the end of April.

China’s industrial output rose 7 percent in April, above forecasts for a 6.3 percent increase and up from a seven-month low of 6 percent in March.

Reuters also reported that traders said many funds are still short copper.

Daily Swing Chart Technical Analysis

The main trend is up according to the swing chart. It turned up last Friday when buyers took out $3.1215. It was reaffirmed yesterday with the rally to $3.1310, but this move was met with strong enough selling to reverse momentum to the downside.

A trade through $3.0140 will change the main trend to down.

The market is still being manipulated by a series of retracement zone levels. The main range is $2.9585 to $3.2180. Its retracement zone is $3.0885 to $3.0575. The market is currently straddling this zone.

The short-term range is $3.2180 to $3.0140. Its retracement zone at $3.1160 to $3.1400 stopped the rally yesterday along with a long-term 50% level at $3.1315. All of these levels should be considered resistance.

Daily Swing Chart Technical Forecast

Based on the latest price at $3.0575 and the earlier price action, the direction of the copper market the rest of the session is likely to be determined by trader reaction to the main Fibonacci level at $3.0575.

A sustained move under $3.0575 will indicate the presence of sellers. If this move creates enough downside momentum, we could see a further break into $3.0140. Look for a possible acceleration to the downside if this level is taken out with the next target the March 26 main bottom at $2.9585.

A sustained move over $3.0575 will indicate that buyers are coming in to support the market. This could lead to a retest of the main 50% level at $3.0885. The next rally through this level is likely to be labored with potential resistance levels coming in at $3.1160, $3.1310, $3.1315 and $3.1400. The latter is a potential trigger point for an acceleration to the upside.