Comex High Grade Copper Price Futures (HG) Technical Analysis – Testing Retracement Zone that Could Determine Longer-Term Trend

May Comex High Grade Copper futures plunged more than 1 percent on Tuesday as the U.S. Dollar rose after Federal Reserve Chairman Jerome Powell pledged to stick with gradual increases in U.S. interest rates despite the added stimulus of tax cuts and government spending.

The Greenback hit a two-week high against a basket of currencies after his comments shored up expectations that the Fed will press ahead with rate increases, weighing on dollar-denominated assets.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on the trade through $3.1750. The new main top is $3.2635.

The main range is $3.0465 to $3.2905. Its retracement zone at $3.1685 to $3.1395 is currently being tested. Trader reaction to this zone will determine the longer-term tone of the market.

Daily Technical Forecast

Based on the current price at $3.1745 and the earlier price action, the direction of the copper market into the close is likely to be determined by trader reaction to the main 50% level at $3.1685.

A sustained move under $3.1685 will signal the presence of sellers. This could lead to a quick test of the uptrending Gann angle at $3.1565. Taking out this angle could drive the market into the main Fibonacci level at $3.1395. This price is the trigger point for an even steeper sell-off into $3.1015.

Holding above $3.1685 will indicate that buyers are coming in on the test of the major retracement zone. This could fuel the start of a short-covering rally.