Comex High Grade Copper Futures (HG) Technical Analysis – May 30, 2016 Forecast

The July Comex High Grade Copper futures market is closed Monday because of the U.S. Memorial Day bank holiday so we’ll take a look at the weekly chart which should offer you guidance all week especially when combined with the daily chart analysis.

July Copper finished higher last week, driven mostly by short-covering. The market became severely oversold and hedge fund and commodity fund managers decided to book profits rather than sell weakness at current price levels, hoping for a further decline. Their intent is to let the market rally so that they can short again at more favorable price levels.

The main trend is down according to the daily swing chart, but if you look at the range for the year, the market can best be described as sideways or range bound.

The main range is 1.9580 to 2.3290. Its retracement zone is 2.1435 to 2.0995. The market is currently trading inside this range.

The short-term range is 2.3055 to 2.0380. Its retracement zone is 2.1720 to 2.2035. This zone is the primary upside target and likely the next resistance zone and shorting area.

Based on last week’s close at 2.1140, the direction of the market this week is likely to be determined by trader reaction to the main Fibonacci level at 2.0995.

A sustained move under 2.0995 will signal the presence of sellers. This could create enough downside momentum to challenge the next uptrending angle at 2.0580. This angle has provided support the last two weeks so we could see a technical bounce on a test of it.

If the angle at 2.0580 fails as support then look for a possible acceleration to the downside with the next target angle coming in at 2.0080. This is the last potential support angle before the 1.9580 main bottom.

A sustained move over 2.0995 will indicate the presence of buyers. This could create enough upside momentum to challenge the main 50% level at 2.1435. This is followed closely by a long-term uptrending angle at 2.1580.

Overtaking the angle at 2.1580 will indicate the buying is getting stronger with the next major target the short-term retracement zone at 2.1720 to 2.2035 and a downtrending angle at 2.1855.

Watch the price action and read the order flow at 2.0995 all week. Trader reaction to this Fib level will tell us if the short-covering will continue, or if sellers are regaining control.