Comex High Grade Copper Futures (HG) Technical Analysis – May 5, 2016 Forecast

July Comex High Grade Copper futures sank to fresh two-week lows on Thursday, as a stronger dollar prompted commodity markets to take a breather after April’s broad-based rally, while a deteriorating technical picture pointed to further consolidation.

Chinese data showing factory activity in the world’s top metals consumer shrank for a 14^th consecutive month has muddled the outlook for metals demand and dulled hopes of economic revival after a credit-fueled rally.

Data due in coming weeks is expected to show China’s economic activity moderated in April after a strong showing in March, adding to questions over whether the world’s second-largest economy is recovering.

Technically, the main trend is up according to the daily swing chart, but the momentum is to the downside. The market begins today’s regular session in a position to challenge the last main bottom at $2.1370. A trade through this bottom will turn the main trend to down on the daily chart.

The main range is $2.0790 to $2.3055. Its retracement zone is $2.1925 to $2.1655. This was the primary downside target. The market is currently trading on the weak side of this zone, giving the market a strong downside bias.

Based on the current price at $2.1575, the direction of the market the rest of the session is likely to be determined by trader reaction to the Fibonacci level at $2.1655.

A sustained move under $2.1655 will indicate the presence of sellers. This could create enough downside momentum to challenge the 50% level at $2.1435 and the uptrending angle at $2.1290.

Overcoming $2.1655 will signal the presence of buyers. Short-covering could drive the market into an uptrending angle at $2.1790 and a 50% level at $2.1925.

Watch the Fib level at $2.1655 the rest of the session. Look for the downside bias to continue on a sustained move under this price and for the bias to shift to the upside if buyers can overtake it.