Comex High Grade Copper Price Futures (HG) Technical Analysis – Bull Trend Could Gain Momentum Over $3.0625

December Comex High Grade Copper futures rallied to their highest level in nearly three years last week on the back of solid demand signs in China and falling stockpiles. A weaker U.S. Dollar also helped drive up demand for the dollar-denominated futures contract higher.

Technical Analysis

The main trend is up according to the weekly chart. Copper closed near a multi-year high at $3.0625, suggesting the buying is getting stronger. If the upside momentum continues then the rally could extend into the next major tops at $3.2245 and $3.2415.

On the downside, the nearest support is the contract range Fibonacci level at $3.0230 and the contract range 50% level at $2.8250.

Forecast

The direction of the market this week is likely to be determined by trader reaction to $3.0625.

A sustained move over $3.0625 will indicate the presence of buyers. If the upside momentum continues then look for the rally to extend into the next long-term downtrending angle at $2.8350. This is followed by a pair of tops at $3.2245 and $3.2415.

The inability to overtake and extend a rally over $3.0625 will signal the presence of sellers. This could lead to a pullback into $3.0230.

The weekly chart opens up to the downside under $3.0230 with the next major support cluster coming in at $2.8350, $2.8250 and $2.8225.

The danger for the bullish traders this week is a higher-high, lower-close also known as a closing price reversal top. This chart pattern will indicate that the selling is greater than the buying at current price levels and could signal a shift in momentum to down.

Even without a closing price reversal top, a sustained move under $3.0230 will also indicate the selling is getting stronger.

The hedge and commodity funds are behind the rally. They tend to follow the Herd Theory. In other words, once support is broken, they are all likely to begin exiting their positions.