Comex High Grade Copper Price Futures (HG) Technical Analysis – Strong Dollar Could Mean Trouble for Copper

December Comex High Grade Copper futures treaded water most of the session on Wednesday before closing lower. However, the market remained just below its multi-year high set the day before. Some traders blamed end of the month position-squaring for the weakness, but a surge in the U.S. Dollar may have been behind the selling pressure.

The rebound in the U.S. Dollar was fueled by solid economic data which drove up the odds of a Fed rate hike later in the year. Both the quarterly Preliminary GDP and the ADP private sector jobs report beat the estimates.

Technical Analysis

The main trend is up according to the daily swing chart. On Wednesday, it posted an inside move which suggests investor indecision and impending volatility. However, it this case it may also be suggesting a shift in investor sentiment due to the strength in the U.S. Dollar.

A trade through $3.1215 will signal a resumption of the uptrend. If enough momentum is created by the move, we could see the rally extend into $3.2245 to $3.2415. This is not likely to occur if the dollar begins to strengthen over the near-term.

A trade through $3.0625 will be a sign of weakness. If profit taking increases under this level then look for the break to extend.

The new short-term range is $2.8935 to $3.1215. If the selling pressure continues then its retracement zone at $3.0075 to $2.9805 will become the primary downside target.