Comex High Grade Copper Futures (HG) Technical Analysis – May 3, 2016 Forecast

July Comex High Grade Copper futures could come under pressure today because of a firmer U.S. Dollar and a bearish manufacturing report from China. The Caixin/Markit survey of purchasing managers in China’s manufacturing sector fell to 49.4 last month from 49.7 in March, the 14^th consecutive month of shrinkage.

Technically, the main trend is up, but the market is having trouble taking out the recent top at 2.3055. This indicates a loss of upside momentum. The chart pattern suggest that a big seller is stopping the market from taking out last month’s top at 2.3290.

The short-term range is 2.1370 to 2.3055. Its retracement zone at 2.2210 to 2.2015 is the primary downside target. This zone provided support last week.

The longer-term range is 2.0790 to 2.3055. Its retracement zone at 2.1920 to 2.1655 is the next target zone. Since the main trend is up, buyers may come in on a test of these retracement zones.

Based on the close at 2.2665, the direction of the market today is likely to be determined by trader reaction to the downtrending angle at 2.2705.

A sustained move under 2.2705 will indicate the presence of sellers. The first two down side targets are a pair of uptrending angles at 2.2590 and 2.2470. The latter is the trigger point for an acceleration to the downside with 2.2210 the next downside target.

A sustained move over 2.2705 will signal the presence of buyers. This could trigger a fast rally into a series of resistance angles at 2.2880, 2.2905 and 2.2970. The latter is the last potential resistance angle before the 2.3055 main top.

Watch the price action and read the order flow at 2.2705 today. Trader reaction to this angle will tell us if the buying is getting stronger of if sellers are taking control.