Comex High Grade Copper Futures (HG) Technical Analysis – February 4, 2015 Forecast

March Comex High Grade Copper futures are trading higher shortly before the cash market opening. Yesterday, the market surged, posting its largest one-day gain in several years. The overnight rally has put the market in a position to challenge the last swing top at 2.6360. A trade through this price will turn the main trend to up.

Buy stops are likely to be hit on a trade through 2.6360, but it may not be the best buy signal. Although the main trend will turn to up, it may be necessary to correct in order to form a secondary higher bottom. If copper is getting set up for a strong, long-term rally then it must survive a test of the recent bottom at 2.4190.

The supply/demand fundamentals are still bearish so this current move is being generated by speculative buying. These traders are only interested in the short-term momentum. Nothing is taking place which suggests the long-term trend is turning higher.

The catalyst behind the current short-covering rally is the strong up move in crude oil and speculation that the Chinese government will provide stimulus to boost its economy.

Technically, the best support is an uptrending angle at 2.5590. Watch for an acceleration to the downside if this angle is taken out with conviction. The daily chart indicates there is plenty of room to the downside with the next angle coming in at 2.4890.

On the upside, the major resistance angle comes in at 2.6150. This angle provided solid resistance during the pre-market session. Overtaking this angle with conviction should trigger a change in trend to up over 2.6360.

The first major upside target is a 50% level at 2.6620. The daily chart will open up over this key pivot price with the next major downtrending angle coming in at 2.7600.

Look for a bullish tone to develop over 2.6150 and a bearish tone under 2.5590. Watch for rising volume on each breakout move.