Comex High Grade Copper Futures (HG) Technical Analysis – February 23, 2017 Forecast

May Comex High Grade Copper futures fell on Wednesday after commodity funds reduced positions in reaction to the minutes from the Fed’s last monetary policy meeting on January 31- February 1.  Although the U.S. Dollar weakened after the release of the minutes, most traders agree that the Fed stands ready raise rates as early as March.

If rates go up, the dollar is likely to move higher. This would make dollar-denominated metals such as copper more expensive for non-U.S. firms, potentially weakening demand, though nervousness about supplies from top producers Chile and Indonesia are expected to support prices.

Traders are still expressing concerns over the strikes in Chile and Indonesia, however, the price action suggests they expect a quick resolution.

Fundamentally, the government tried to mediate talks between BHP Billiton and striking workers at its Escondida mine in Chile. However, the talks failed. Nonetheless, investors still aren’t pricing in a long strike.

In Indonesia, Freeport-McMoRan has warned it could take the government to arbitration and seek damages over a dispute that has halted operations at Grasberg.

Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. Taking out $2.8360 will signal a resumption of the uptrend. A move through $2.6260 will turn the main trend to down.

The nearest minor top is $2.7755. A trade through $2.6955 will turn the minor trend to down.

The main range is $2.6260 to $2.8360. Its retracement zone is $2.7310 to $2.7062. This zone is being treated like support.

The short-term range is $2.8360 to $2.6955. Its retracement zone at $2.7660 to $2.7825 is resistance. It stopped the rally on Tuesday at $2.7755.

Forecast

Based on Thursday’s close at $2.7460, the nearest upside target is a downtrending angle at $2.7560 and a resistance cluster at $2.7660.

A sustained move under $2.7560 will signal the presence of sellers. This could drive the market into the main 50% level at $2.7310. This price is the trigger point for an acceleration to the downside with the next targets the main Fibonacci level at $2.7060, last week’s low at $2.6955 and the uptrending angle at $2.6910.

On the upside, overtaking and sustaining a move above $2.7660 will indicate the presence of buyers. This could drive the market into the minor top at $2.7755 and the short-term Fib at $2.7825.