Comex High Grade Copper Futures (HG) Technical Analysis – October 18, 2016 Forecast

December Comex High Grade Copper futures remain under pressure as investors prepare for the release of major reports from China early Wednesday. The results of the reports could determine the near-term direction of copper prices because they are likely to affect demand.

The key reports include quarterly GDP which is expected to come in at 6.7%. Industrial Production is forecast at 6.4%. Fixed Asset Investment at 8.2% and Retail Sales at 10.7%.

In other news, the total net long position of funds trading copper on the London Metal Exchange fell to 36,019 contracts last Friday from a net long position of 38,602 contracts the previous week, the LME’s Commitments of Traders Report showed on Tuesday.

Ahead of the reports from China, copper traders are likely to react to the movement in the U.S. Dollar since it is a dollar-denominated currency. A stronger dollar should pressure copper. A weaker dollar should be supportive.

TECHNICAL ANALYSIS

The main trend is down according to the daily swing chart. The market is not in a position to change the main trend to up, but the market is in the window of time to produce a potentially bullish closing price reversal bottom.

The main range is $2.0640 to $2.2190. Its retracement zone is $2.1415 to $1.2130. The market is currently trading below this zone, putting it in a bearish position.

FORECAST

The most important support angle today is $2.0960. This is the last potential support angle before the $2.0640 main bottom. A sustained move under this angle should lead to a test of the downtrending angle at $2.0990. Crossing to the weak side of this angle will put the market in an extremely bearish position.

Holding above the uptrending angle at $2.0960 will signal the presence of buyers. This could generate enough upside momentum today to challenge the Fibonacci level at $2.1230. This is a possible trigger point for a move into the uptrending angle at $2.1290 and the 50% level at $2.1415.

Watch the price action and read the order flow on a test of $2.0960. Trader reaction to this angle will tell us if the buyers are coming in to support the market, or if sellers are trying to press this market lower.