Comex High Grade Copper Futures (HG) Technical Analysis – March 13, 2017 Forecast

May Comex High Grade Copper prices are trading higher early Monday as investors react to technically oversold conditions following last week’s biggest sell-off since December. Helping to boost prices are a stronger Euro, a weaker U.S. Dollar and worries over supply due to an indefinite workers’ strike at Peru’s top copper miner.

Workers at Freeport-McMoRan’s Cerro Verde in Peru started an indefinite strike on Friday that halted output of about 40,000 tonnes per month. At BHP Billiton’s Escondida copper mine in Chile, the world’s largest, the striking union said on Saturday it will not accept the company’s offer to return to the negotiating table, and called on BHP to clarify its negotiating positions.

Technical Analysis

The main trend is down according to the daily swing chart, but momentum shifted to the upside with the formation of the new main bottom at $2.5585. A trade through this bottom will signal a resumption of the downtrend.

The major long-term retracement zone is $2.6460 to $2.6010. Sellers took out this zone last week, but buyers have regained it.

The short-term range is $2.7865 to $2.5585. Its 50% level is the first target at $2.6725.

The main range is $2.8360 to $2.5585. Its retracement zone at $2.6975 to $2.7300 is the primary upside target.

Forecast

Based on the current price at $2.6175 and the earlier price action, the direction of the copper market today is likely to be determined by trader reaction to the major Fibonacci level at $2.6010.

A sustained move over $2.6010 will signal the presence of buyers. This could generate the upside momentum needed to challenge the resistance cluster at $2.6460. Since the main trend is down, sellers could come in on a test of the cluster. If the buying is strong enough to overtake the cluster then look for an acceleration into the 50% level at $2.6725. This is another trigger point for an acceleration into the main retracement zone at $2.6975 to $2.7300.

If $2.6010 fails as support then we could see a labored move into potential support angles at $2.5985, $2.5785, $2.5685 and $2.5635. The latter is the last potential support angle before the $2.5585 main bottom.

Things could be heating up again in the copper market with an additional strike in Peru so don’t be surprised by another strong short-covering rally if early negotiations fail.