Comex High Grade Copper Price Futures (HG) Technical Analysis – Continues to Build Support Base

December Comex High Grade Copper futures rallied sharply higher early Tuesday, helped by a rally in crude oil prices which drove up commodities across the board. Some traders also said longer-term expectations for higher demand amid constrained supply could continue to provide support and the momentum needed to send the market higher.

However, by the end of the session, concerns over the strong U.S. Dollar’s effect on demand over the short-run weighed on the market, leading to a lower close.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the main top at $3.1785 on September 5.

On September 22, copper posted a closing price reversal bottom which could be the first sign that momentum is getting ready to shift back to the upside. Tuesday’s follow-through rally confirmed the chart pattern but buying dried up. This indicates that short-covering rather than new buying was behind the earlier rally.

The price action also indicates that bullish traders may be trying to build a support base big enough to support the next rally.

The minor trend will turn up on a trade through $2.9935. The main trend will resume on a move through $2.8940.

The major support zone is $2.9150 to $2.8525. Inside this support zone is a pair of main bottoms at $2.8935 and $2.7895. These bottoms stopped the selling late last week.

The short-term range is $3.1785 to $2.8940. If buyers can take out $2.9935 then we could see an acceleration into its retracement zone at $3.0375 to $3.0700.

If $2.8940 fails as support then look for investors to continue to try to build a support base inside $2.9150 to $2.8525. However, it is going to become increasing difficult to do if sellers continue to take out key bottoms.