Comex High Grade Copper Price Futures (HG) Technical Analysis – Break Through $3.1150 Confirms Reversal Top

December Comex High Grade Copper futures posted a higher close on Wednesday, but remained inside yesterday’s range. This is an indication of investor uncertainty and trader indecision. It could also mean the market is going through a transition period where upside momentum turns down.

Conventional technical analysis also suggests the market may be overbought after a wave of speculative buying came in on Tuesday to drive the market to a three-year high.

Yesterday’s higher-high, lower-close indicates that the selling may be higher than the buying at current price levels. The selling began during the London session then moved to New York after investors began booking profits amid ongoing tensions over North Korea.

Technical Analysis

The main trend is up according to the daily swing chart. However, yesterday’s closing price reversal top may be signaling that the selling is greater than the buying at current price levels. A trade through $3.1785 will negate the chart pattern and signal a resumption of the uptrend. This could trigger an acceleration into the August 25, 2014 main top at $3.2245 and the July 13, 2014 main top at $3.2415.

A move through $3.1150 will confirm the reversal top. This could lead to a break into the last main top at $3.0625. This level may become support because “old tops tend to become new bottoms”.

The short-term range is $2.8935 to $3.1785. Its retracement zone at $3.0360 to $3.0025 is the primary downside target. Since the main trend is up, we could see a technical bounce on the first test of this area. If it fails then momentum will shift to the downside.

As far as the Gann angles are concerned, the nearest downside target angle comes in at $3.0635. Once again, we could see a technical bounce on the first test of this angle. If it fails then look for a move into the short-term retracement zone.

On the upside, the target angle comes in at $3.2335. Crossing to the strong side of this angle will put the market in a bullish position.

Since the main trend is up and the market is saturated with longs, if there is selling pressure, the move is likely to be labored because investors are likely to continue to come in on the dips into support. However, watch for heavy selling volume as each potential support level is broken. This will be caused by a combination of sell stops and new short-sellers.