Comex High Grade Copper Futures (HG) Technical Analysis – December 7, 2016 Forecast

March Comex High Grade Copper futures are trading slightly higher, but volatility is down for a second day as the market approaches several key resistance levels that ultimately could influence the direction of the market over the near-term.

Lately, copper has been supported by prospects of higher demand from China and as inventories have dwindled, but traders remain cautious about buying strength at relatively high levels due to the rapid pace of the current rally. Traders have recently responded to data from China showing the economy is starting to pick up due to increasing inflation and credit expansion.

To put it another way, the rally looks strong over the short-run, but unstable over the long-term.

Technical Analysis

The main trend is up according to the daily swing chart, but the rally has stalled. Taking out the recent top at $2.7350 will signal a resumption of the uptrend. A move through $2.5505 will change the main trend to down. This is followed by another main bottom at 2.4350.

The short-term range is $2.7530 to $2.5505. Its retracement zone at $2.6515 to $2.6755 is currently being tested. This zone is controlling the short-term direction of the market.

The intermediate range is $2.4350 to $2.7530. Its retracement zone is $2.5940 to $2.5565. This zone provided support last week.

Forecast

Based on the current price at $2.6865, the direction of the copper market today is likely to be determined by trader reaction to the short-term Fibonacci level at $2.6755.

A sustained move over $2.6755 is likely to trigger a rally into a pair of uptrending angles at $2.7350 and $2.7570. Overcoming these angles will be a sign of strength. This could trigger a breakout over $2.7530.

A sustained move under $2.6755 will signal the presence of sellers. This could drive the market into $2.6515. Look for an acceleration to the downside on a break under this price with the next targets $2.5940 and $2.5850.

Watch the price action and read the order flow at $2.6755 today. Trader reaction to his level will set the tone for the day.