December Comex High Grade Copper futures finished lower on Thursday and the selling pressure is picking up on Friday as investors continue to react to the stronger U.S. Dollar. A rising dollar tends to lower foreign demand for copper because it is a dollar-denominated currency.
Traders are also worried about future demand from China. Additionally, the hedge funds remain long but they stopped buying almost two-weeks ago when prices rallied way ahead of the fundamentals.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending sideways-to-lower since October 16.
A trade through $3.2595 will signal a resumption of the uptrend. A move through $3.1380 will indicate the selling is getting stronger.
The short-term range is $3.2595 to $3.1380. Its 50% level or pivot at $3.1990 is controlling the short-term direction of the market. Closing below this level is giving the market a downside bias.
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, buyers may treat this zone like a value area. A test of this zone may bring the buyers back into the market.
Daily Forecast
If the downside momentum continues then look for a test of $3.1380. If this price is violated then look for an acceleration into the retracement zone at $3.0930 to $3.0535. Start watching for a buyers on the first test of this zone.
Aggressive counter-trend sellers could come in on a test of $3.1990. If they defend this level successfully then this will signal that the selling is greater than the buying at current price levels. Overcoming this pivot will mean that buyers are returning.