Comex High Grade Copper Price Futures (HG) Technical Analysis – Strong Over $3.0930, Weak Under $3.0535

December Comex High Grade Copper futures closed lower on Friday as bullish traders continued to try to defend the market inside a major support zone. An early attempt to rally failed and prices retreated to post their lowest close since October 10.

This week, the market was dragged down by weak aluminum prices which posted their worst week since May 2016. Traders are saying that copper and aluminum prices were being pressured by profit-taking and as speculative investment flows into industrial metals ebbed on caution over the scale of expected Chinese capacity cuts.

Traders are also saying that the huge spike to the upside in October put prices well ahead of the fundamentals.  Furthermore, bullish investors may have overestimated the amount of demand from China.

Daily Swing Chart Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since October 16. A trade through the minor bottom at $3.0585 will indicate that the selling is getting stronger.

Daily Retracement Zone Analysis

The main range is $2.9260 to $3.2595. Its retracement zone at $3.0930 to $3.0535 is currently being tested. This zone is controlling the near-term direction of the market.

Since the main trend is up, buyers have been coming in because it is considered a value area. Furthermore, they are doing all they can to defend the trend against a possible massive sell-off.

Sellers know the hedge funds are long and are trying to pressure the market through the zone in an effort to trigger sell stops and the start of a steep decline.

If the lower or Fibonacci level at $3.0535 is taken out with conviction then look for the selling to possibly extend into $2.9260 to $2.8795 over the near-term.

Overcoming and sustaining a rally over the upper or 50% level at $3.0930 will signal the return of buyers. If this generates enough upside momentum, we could see a further rally into the short-term 50% level at $3.1590.

Basically, look for an upside bias to develop on a sustained move over $3.0930 and for a downside bias on a sustained move under $3.0535.