Comex High Grade Copper Price Futures (HG) Technical Analysis – Start of Chinese New Year Likely to Influence Volatility

May Comex High Grade Copper futures eased from its highest level since January 4 but still managed to close higher for the session. Volume was below average due to the start of the Chinese New Year.

Traders were also reacting to an outside move in the U.S. Dollar Index which produced a higher close after touching a three-year low and failing to take out the December 16, 2014 main bottom at 88.067.

Daily Swing Chart Analysis

The main trend is up according to the daily swing chart. It turned up on Friday when buyers took out main tops at $3.2775 and $3.2870. The market is up only five days from $3.0465, but the size of the move may have put it into overbought territory. A 7 to 10 day rally will put the market in the window of time for a potentially bearish closing price reversal top.

The main range is $3.3335 to $3.0465. Its 50% level or pivot is $3.1900. The close above this level is helping to give the market a strong upside bias.

The new short-term range is $3.0465 to $3.2905. If there is a short-term correction then its retracement zone at $3.1685 to $3.1395 will become the primary downside target.

Daily Swing Chart Forecast

Due to the steep 5-day rally, the direction of the copper market on Monday is likely to be determined by trader reaction to $3.2905 and $3.2555.

A sustained move over $3.2905 will signal the presence of buyers. If this creates enough upside momentum, we could see a test of the December 28 main top at $3.3335. Overtaking this level could lead to a test of the June 5, 2013 main top at $3.3490.

A move through $3.2555 will make $3.2905 a new minor top. If momentum begins to build to the downside then we could see a sharp break into $3.1900. This will be followed by a test of $3.1685 to $3.1395. Since the main trend is up, buyers are likely to come in on a test of these levels.

With the onset of the Chinese New Year, volume may be low. Thin trading conditions could lead to volatile price swings. Some moves could be exaggerated if the U.S. Dollar becomes volatile also.