Comex High Grade Copper Price Futures (HG) Technical Analysis – Downside Pressure Could Drive Market into $3.0885 to $3.0575

Copper futures surged last week to their highest level since February 27 amid worries about U.S. sanctions on Russia affecting supply of industrial metals. Commodity prices also received a shot in the arm from a surge in crude oil futures to their highest levels since late 2014.

By the end of the week, however, rapidly rising U.S. Treasury yields and a stronger U.S. Dollar had put a lid on the rally, fueling a bout of profit-taking into the close.

For the week, July Comex High Grade Copper futures settled at $3.1355, up $0.0435 or +1.41%.

The price action late in the week suggests investors have discounted the sanctions news and are now reacting to expectations for higher interest rates and the stronger U.S. Dollar, which tends to weigh on demand for dollar-denominated markets like copper.

 

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. The main trend will change to up on a move through $3.3420. A trade through $2.9585 will signal a resumption of the downtrend.

Last week’s price action was impressive, but it didn’t affect the trend. It came close to shifting momentum to the upside, but the rally seems to have died following a test of the main retracement zone.

The main range on the weekly chart is $3.3420 to $2.9585. Its retracement zone at $3.1505 to $3.1955 stopped the rally last week and should be considered resistance this week. It is also controlling the longer-term direction of the market. In other words, I don’t think copper can go on an extended rally unless it can build a support base on the bullish side of the retracement zone.

The new short-term range is $2.9585 to $3.2180. Its retracement zone at $3.0885 to $3.0575 is the primary downside target. It provided support the last two weeks. Aggressive counter-trend buyers are likely to come in on a test of this zone in an effort to form a secondary higher bottom. If it fails to hold then we could see a retest of the main bottom at 2.9585 over the near-term.

Weekly Swing Chart Technical Forecast

Based on last week’s close at $3.1355, the direction of the July Comex High Grade Copper market this week is likely to be determined by trader reaction to the main 50% level at $3.1505.

A sustained move under $3.1505 will signal the presence of sellers. This could create the downside momentum necessary to drive prices into the short-term retracement zone at $3.0885 to $3.0575. We could see a technical bounce on the first test of this zone. If $3.0575 fails then look for a possible acceleration to the downside with $2.9585 the next target.

A sustained move over $3.1505 will indicate the presence of buyers. This could trigger a retest of the main Fibonacci level at $3.1955, followed closely by last week’s high at $3.2180.

The daily chart indicates there is plenty of room to the upside over $3.2180 with the main top at $3.2420 the next major upside target.