Comex High Grade Copper Price Futures (HG) Technical Analysis – Upside Momentum Supported by Strong Global Demand, Tight Supplies

September Comex High Grade Copper futures surged to the upside on position-squaring ahead of the roll over into the December futures contract and a sudden plunge in the U.S. Dollar. The drop in the dollar was bullish because a weaker dollar tends to lead to increased demand for dollar-denominated copper.

Copper was also supported by a surge in industrial metals led by a rally in Zinc and Aluminum. Zinc prices soared to their highest level in almost a decade. The rallies are being supported by strong global demand and tight supplies. Hedge fund buying is also behind the momentum as they opted to buy strength today rather than wait for a pullback into support.

In other news, late in the session, Reuters reported that local residents in a remote Andean region in Peru have blocked trucks transporting copper concentrates from MMG Ltd.’s Las Bambas mine to port to demand payment for use of a road, a representative for the ombudsman’s office said on Wednesday.

Technical Analysis

The strong rally in copper took out the previous top at $2.9550, signaling a resumption of the uptrend. This puts the market on course for an eventual test of the major Fibonacci level at $3.0300.

On the downside, the major support is a long-term uptrending angle at $2.9010.

The current rally is all about momentum buying so investors should continue to monitor the activity by the hedge funds. The fundamentals are bullish at this time, but prices are expensive. If the funds stop buying strength then the market may retreat into support. So if buying upside breakouts, make sure volume is on your side, or you may get caught in a bull trap.

Rollover to the December futures contract on Thursday.