Comex High Grade Copper Price Futures (HG) Technical Analysis – Rapidly Approaching $2.9150 to $2.8525 Support Zone

December Comex High Grade Copper hit its lowest level since August 17 on Thursday after the U.S. Federal Reserve raised expectations for a third rate hike this year at its Federal Open Market Committee meeting yesterday. The news drove up U.S. Treasury yields which made the U.S. Dollar a more popular investment, reducing demand for dollar-denominated copper.

A weaker dollar helped drive up copper prices in August and now we’re seeing the stronger dollar pounding industrial and precious metals.

Traders have been eyeing the price action as the market approaches a major support area. Fundamentally, demand may not be that strong, but supplies have been reduced. The bulls are thinking that it’s not going to take much demand to put the metal in deficit.

In other news, the global world refined copper market showed a 70,000 tonnes deficit in June, compared with a 50,000 tonnes deficit in May, the International Copper Study Group (ICSG) said.

Technically, the main trend is up according to the daily swing chart. However, momentum has been trending lower since September 5.

Copper is also down 12 days from $3.1785, which puts the market in the window of time for a potentially bullish closing price reversal bottom.

The main trend will change to down on a trade through $2.8935. This is followed closely by another main bottom at $2.8795.

The market is rapidly approaching a major retracement zone at $2.9150 to $2.8525. If a closing price reversal bottom is going to form, it’s likely to occur on a test of this zone.

Even if the trend changes to down on a break through $2.8935, the market may be oversold enough to trigger a short-covering rally. A test of $2.9150 to $2.8525 could also encourage aggressive counter-trend buying.