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

December Comex High Grade Copper futures are moving higher early Thursday in reaction to the lower U.S. Dollar which theoretically makes dollar-nominated copper cheaper for foreign buyers, increasing demand.

The dollar is under pressure because the Fed minutes showed little support for an imminent U.S. rate hike. Fed officials agreed at the July meeting that more economic data was needed before raising rates.

Copper is also getting support from lessening concerns about demand issues in China. Speculative buyers are coming in the market on the idea that no bad news from China is good news for copper prices. Industrial metals are also getting support from renewed talk of fiscal stimulus because central bank were running out of options.

TECHNICAL ANALYSIS

TREND INDICATOR SWING CHART

The main trend is down according to the daily swing chart. However, momentum shifted to the upside with the formation of the closing price reversal bottom at $2.1455 on August 15.

The down trend will resume on a trade through $2.1455. A trade through $2.2570 will change the main trend to up.

RETRACEMENT ZONES

The main range is $2.0315 to $2.2860. Its retracement zone is $2.1590 to $2.1290. This zone provided support earlier in the week when copper prices hit there low at $2.1455.

The short-term range is $2.2570 to $2.1455. Its retracement zone at $2.2015 to $2.2145 is the primary upside target.

This zone is important because sellers are likely to show up in an effort to form a potentially bearish secondary lower top. Buyers are going to try to take out this zone in an effort to solidify the main bottom at $2.1455 and create enough upside momentum to challenge or perhaps take out the main top at $2.2570.

GANN ANGLES

On the upside, the first target angle is at $2.1920. This angle could act like resistance on the first test because the main trend is down. However, if taken out then look for the rally to extend into the next angle t $2.2245.

On the downside, a pair of uptrending angles at $2.1755 and $2.1565 could slow down the selling pressure. The best support is a price cluster formed by a pair of angles at $2.1540 and $2.1530.

WHAT TO DO TODAY

Based on the early price action, the direction of the market the rest of the session is likely to be determined by trader reaction to the downtrending angle at $2.1920.

Overtaking $2.1920 and sustaining the move could trigger a further rally into the short-term retracement zone at $2.2015 to $2.2145, followed by a downtrending angle at $2.2245.

The inability to overcome the downtrending angle t $2.1920 will signal the presence of sellers. However, expect a labored break because of numerous support angles. Start thinking about playing the short side if $2.1530 fails as support. An acceleration to the downside could start if $2.1455 is taken out with conviction.