Comex High Grade Copper Price Futures (HG) Technical Analysis – Needs Wave of Fresh Buying to Overcome Major Resistance

Copper prices closed lower on Friday as investors lightened up on the upside, following a 16 session rally. We probably saw a round of position-squaring and profit-taking ahead of the long holiday week-end.

March Comex High Grade Copper settled at $3.3005, down $0.0080 or -0.24%.

To put it into perspective, copper rallied from December 5 to December 28 without posting a lower-low than the previous session. During the 16 session rally, there were two inside days, but the rest of the sessions were higher-highs. There were also 16 consecutive higher closes.

The rally was driven by expectations of increased demand from China, supply issues and an extremely weak U.S. Dollar which made copper more attractive to foreign buyers.

The main trend is up according to the daily swing chart. The uptrend will resume on a move though last week’s high at $3.3220.

The copper market could be running into resistance because of a series of long-term main tops ranging from the October 22, 2013 main top at $3.3055 to the June 5, 2013 main top at $3.3580. These tops may be strong enough to scare some of the weaker longs out of the market due to value issues.

If the buying is strong enough to overcome $3.3580, however, we could see an acceleration to the upside with the next target the March 27, 2013 main top at $3.4440.

If a short-term range is forming between $2.9430 and $3.3220 and profit-taking sets in then we could see enough selling pressure to drive the market into its retracement zone at $3.1325 to $3.0880.

For the bullish investors, the U.S. Dollar is going to have to continue to sell-off in order to generate the strong buying needed to overtake the resistance zone at $3.3055 to $3.3580. Expectations of greater demand from China, or supply issues are not going to be enough to drive this market beyond the current resistance. If this is the case then copper is likely to pullback into a value area like $3.1325 to $3.0880 in order to attract new buyers.