Comex High Grade Copper Futures (HG) Technical Analysis – October 14, 2016 Forecast

cember Comex High Grade Copper prices fell for a second day in reaction to weak Chinese trade data for September that showed a sharp decline in exports. The news also raised new concerns about the strength of the world’s No. 2 economy and the biggest user of industrial metals.

On Thursday, a fresh report suggested that the current recovery in the economy may be short-lived after China’s September exports fell 10-percent from a year earlier, well below expectations, while imports unexpectedly shrank after picking up in August. The poor trade figures pointed to weaker demand both home and abroad and deepened concerns over the latest depreciation in China’s yuan currency.

To some copper traders, the low number for September was not much of a surprise, nonetheless, prices plunged on Thursday and are expected to continue that trend on Friday.

TECHNICAL ANALYSIS

The main trend is down according to the daily swing chart. Thursday’s sell-off took out the previous bottom at $2.1455, reaffirming the downtrend while making $2.2025 a new main top. This puts the market on course for a possible challenge of the next major main bottom at $2.0640.

The main range is $2.0640 to $2.2190. The close below its retracement zone at $2.1415 to $2.1230 puts the market in a bearish position at the start of the session today.

FORECAST

BASED ON THE CURRENT PRICE AT $2.1220, THE DIRECTION OF THE COPPER MARKET TODAY IS LIKELY TO BE DETERMINED BY TRADER REACTION TO A CLUSTER OF NUMBERS AT $2.1190, $2.1230 AND $2.1240.

A SUSTAINED MOVE UNDER $2.1240 WILL INDICATE THE SELLING PRESSURE IS GETTING STRONGER. THIS COULD TRIGGER A STEEP SELL-OFF INTO THE NEXT SUPPORT ANGLE AT $2.0940. THIS IS THE LAST POTENTIAL SUPPORT ANGLE BEFORE THE $2.0640 MAIN BOTTOM.

OVERCOMING THE UPTRENDING ANGLE AT $2.1240 WILL INDICATE THAT PROFIT-TAKING OR BOTTOM-PICKING IS TAKING PLACE. THIS MAY GENERATE ENOUGH UPSIDE MOMENTUM TO FUEL A SHORT-COVERING RALLY INTO THE 50% LEVEL AT $2.1415. THIS IS THE TRIGGER POINT FOR AN EVEN STEEPER RALLY WITH $2.1690 THE NEXT TARGET.

IF TRADERS DECIDE TO CONTINUE TO REACT TO THE NEWS FROM THE PREVIOUS DAY THEN THE SELL-OFF SHOULD CONTINUE. THE DIRECTION OF THE U.S. DOLLAR SHOULD ALSO HAVE AN INFLUENCE ON WHAT THE MARKET DOES TODAY. A STRONG DOLLAR SHOULD ALSO RAISE QUESTIONS ABOUT FUTURE DEMAND FROM FOREIGN TRADERS.

LOOK FOR THE DOWNSIDE BIAS TO CONTINUE ON A SUSTAINED MOVE UNDER $2.1190 AND AN UPSIDE BIAS TO BEGIN ON A SUSTAINED MOVE OVER $2.1240.