Comex High Grade Copper Futures (HG) Technical Analysis – October 26, 2016 Forecast

December Comex High Grade Copper is trading flat shortly before the regular session opening. There has been no follow-through to the upside after yesterday’s huge move. This may be an indication that the move was fueled by short-covering rather than new buying.

The U.S. Dollar is trading lower which should underpin the market today. Keeping a lid on prices is the oversupply situation and worries over low demand from China.

Technical Analysis

The main trend is down according to the daily swing chart. The market is far from changing the trend to up, however. It is currently testing the retracement zone that could determine whether momentum is changing to up. A trade through $2.0845 will signal a resumption of the downtrend.

The short-term range is $2.2025 to $2.0845. Its retracement zone is $2.1435 to $2.1575. Trader reaction to this zone will determine whether the rally continues on to the $2.2025 main top, or if a new secondary lower top forms.

Forecast

Based on the current price at $2.1375 and the early price action, the direction of the copper market today is likely to be determined by trader reaction to the price cluster at $2.1435 to $2.1440.

Look for the short-covering rally to resume on a move over $2.1440. This could generate the upside momentum needed to challenge the Fibonacci level at $2.1575. The rally could expand over this level with the next target another resistance cluster at $2.1740 to $2.1750.

A sustained move under $2.1435 will signal the presence of sellers. This could trigger a fast break into a downtrending angle at $2.1290.

The daily chart opens up to the downside under $2.1290 with the next major target coming in at $2.1040.

Look for a strong upside bias to develop on a sustained move over $2.1440 and a strong downside bias to develop on a move through $2.1290.