Comex High Grade Copper Price Futures (HG) Technical Analysis – Likely to Test $3.0930 to $3.0535 Value Zone

December Comex High Grade Copper futures settled slightly lower on Friday after giving back earlier gains. Despite four straight losing sessions after a spike into a three-year high on Monday, the market still managed to post a solid gain for the week.

Strong hedge fund buying drove copper prices into $3.2595 on October 16, but the rally stalled and prices retreated the rest of the week due to unimpressive economic data from China and a stronger U.S. Dollar.

China’s GDP met expectations and the rise in the U.S. Dollar helped make the industrial metal more expensive for foreign buyers, limiting demand.  Trading volume fell throughout the week as investors prepared for policy announcements from China’s Communist Party.

Daily Swing Chart Analysis

The main trend is up according to the daily swing chart. Early in the week, the market spiked into $3.2595 after taking out the August 25, 2014 main top at $3.2245 and the July 13, 2014 main top at $3.2415.

Breaking back below $3.2415 and $3.2245 indicates the selling is greater than the buying at current price levels, but it doesn’t mean momentum has shifted or the trend has turned lower. These two prices are new resistance along with last week’s high at $3.2595.

Overtaking $3.2595 will signal a resumption of the uptrend. If this move creates enough upside momentum, copper may test the December 26, 2013 main top at $3.2930. This is also a potential trigger point for an acceleration into the August 23, 2013 main top at $3.3495.

The main range is $2.9260 to $3.2595. Its retracement zone at $3.0930 to $3.0535 is the primary downside target.

Since the main trend is up, I expect buyers to step in on a test of the retracement zone. This zone also represents value.

Momentum will shift to the downside if $3.0535 fails as support.