Comex High Grade Copper Futures (HG) Technical Analysis – May 4, 2016 Forecast

Sellers continued to hit July Comex High Grade Copper futures early Wednesday after yesterday’s steep sell-off. The catalyst behind the selling pressure continues to be concern over Chinese demand after the release of a weaker-than-expected manufacturing report on Tuesday. The strong recovery by the U.S. Dollar Index also pressured the market since copper is a dollar-denominated commodity.

Technically, the main trend is up according to the daily swing chart, but momentum is clearly to the downside.

The short-term range is 2.1370 to 2.3055. Its retracement zone at 2.2210 to 2.2015 is currently being tested. Since the trend is up, buyers may come in to try to produce a secondary higher bottom and to defend the trend.

The longer-term range is 2.0790 to 2.3055. Its retracement zone at 2.1920 to 2.1655 is the next major downside target.

Combining the two retracement zones makes 2.2010 to 2.1920 an important area to watch for buyers.

Based on yesterday’s close at 2.2190 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the 50% level at 2.2210.

A sustained move under 2.2210 will indicate the presence of sellers. This could drive the market into the Fibonacci level at 2.2010. This is followed closely by an uptrending angle at 2.1970 and a 50% level at 2.1920.

The daily chart begins to open up under 2.1920 with the next two targets coming in at 2.1740 and 2.1655.

A sustained move over 2.2210 will signal the presence of buyers. The first target is a downtrending angle at 2.2255. This angle could act like resistance on the first test, but it is also the trigger point for an acceleration to the upside since the next target is way up at 2.2655.

Watch the price action and read the order flow on a test of 2.2210 and 2.2010. Look for an upside bias to develop on a sustained move over 2.2210 and a downside bias on a sustained move under 2.2010.