September Comex High Grade Copper futures surged to their highest level since May 2 during the U.S. trading session in reaction to a late buying spree in
September Comex High Grade Copper futures surged to their highest level since May 2 during the U.S. trading session in reaction to a late buying spree in London and Asia. Prices were under pressure earlier in the session as investors reacted to the news that new orders for key U.S.-made capital goods fell unexpectedly in May, suggesting a loss of momentum in the manufacturing sector.
The news was primarily ignored by bullish speculators who came in with enough buying power to halt the sell-off and trigger a strong recovery into the mid-session.
The main trend is up according to the daily swing chart. The upside momentum was solidified on Tuesday when buyers took out last week high at $2.6625. A strong close today will put the market in a position to continue the rally which could lead to an eventual test of the May 1 top at $2.7000.
Copper is now up eight days from its last main bottom which puts it in the “window of time” for a potentially bearish closing price reversal top. Going into the close, watch for any intraday signs of profit-taking especially if the U.S. Dollar reverses course and starts to move higher.
Based on the current price at $2.6645 and the upside momentum, bullish traders may make a run at the nearest downtrending angle at $2.6750. This is the last potential resistance angle before the $2.7000 main top.
Sellers may come in to stop the rally. A break back under the previous top at $2.6610 will indicate the selling is greater than the buying at current price levels. This could trigger a break back into a downtrending angle at $2.6500. If this angle fails as support then look for the selling to extend into the next uptrending angle at $2.6290.
The angle at $2.6290 is very important because it has been guiding copper prices higher since June 15. If it fails as support then we could see the start of a steep sell-off.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.