Comex High Grade Copper Futures (HG) Technical Analysis – August 12, 2015 Forecast

China’s decision to devalue its currency fooled some September Comex High Grade Copper futures traders into thinking this meant more demand for the industrial metal. This triggered a spike to the upside. However, the rally was nothing but short-covering and aggressive short-sellers jumped on the opportunity to refresh their positions.

Copper prices hit six-year lows on Tuesday on worries that China’s devaluation will contribute to the supply glut by boosting the cost of commodities for the world’s top metals consumer. The volatile price action proved that the bears still have the upper hand and that this market is incredibly weak.

China devalued again on Wednesday. This should lead to further downside pressure because a devaluation makes commodities more expensive for China to import. Additionally, the devaluation also makes exports more competitive, which may eventually increase industrial production and demand for metals.

Eventually, the devaluation may pay-off but that may occur over the long-run. Over the short-run, it is likely to pressure copper until the economy begins to show signs of improvement.

Technically, the main trend is down on the daily swing chart. The new main top is 2.4290. A trade through this level will turn the main trend to up. If sellers hit the market with conviction and drive the market through the 2.3075 main bottom then the next target becomes the May 14, 2009 bottom at 2.2440. This is followed by the April 28, 2009 main bottom at 2.1740.

The direction of the market today will be determined by trader reaction to the main bottom at 2.3075. On the upside, a pair of downtrending angles come in at 2.3450 and 2.3290. Overcoming these angles will indicate the presence of buyers.