Basic Overview
The People’s Bank of China announced a series of easing measures tonight, ranging from short-term to long-term interest rates. This was the catalyst for the rise in copper prices. Things are starting to look better for the market as we also got a 50bps rate cut from the Fed last week.
Central bank easing usually drives the manufacturing cycle, so we can expect a global growth rebound. All of these reasons should support the market and support prices in the coming months (barring a recession of course).
Copper Technical Analysis – Daily Time Frame
Copper daily
On the daily chart, we can see that copper broke its recent high at 4.31 and extended the rally to the 4.45 level after the People’s Bank of China announced stimulus.
If the price pulls back to retest the 4.31 level, we can expect buyers to step in with a defined risk below the level to position a suitable position for a rise to the 4.69 level afterwards. On the other hand, sellers will want to see the price drop to position a suitable position for a fall to the trend line around the 4.15 level.
Copper Technical Analysis – 4 Hour Time Frame
Copper 4 hours
On the 4-hour chart, we can see that we have a rising trend line that defines the current bullish momentum. Buyers are likely to continue relying on the trend line to mark new highs, while sellers want to see the price drop lower to enter the main trend line.
Copper Technical Analysis – 1 Hour Time Frame
Copper 1 hour
On the 1-hour chart, we can see a strong rally following the PBOC announcement overnight. We have a nice support area around the 4.40 level where we can find the confluence of former resistance that has now turned into support and a minor trend line.
If we get a pullback towards support, buyers are likely to step in to take a position to push to new highs, while sellers will look for a breakout to drop to 4.31. The red lines mark the average daily range for today.
Upcoming incentives
Today we have the US Consumer Confidence report. On Thursday we get the latest US Jobless Claims figures. On Friday we wrap up the week with the US Personal Consumption Expenditures report.