Comex High Grade Copper Price Futures (HG) Technical Analysis – Weekly Chart Says Bullish Over $2.9385, Bearish Under $2.8825

Hedge fund liquidation, a stronger U.S. Dollar and concerns over demand from China helped drive copper futures sharply lower early last week, however, the market was able to regain most of the earlier loss with a solid rebound rally on Friday. Most of the rally was attributed to short-covering and profit-taking due to short-term oversold conditions.

December Comex High Grade Copper settled the week at $2.9445, down $0.0045 or -0.15%.

The U.S. Dollar was driven higher after the U.S. Federal Reserve announced its plan to begin trimming its $4.5 trillion balance sheet while leaving open the possibility of a third rate hike in December. This news drove up U.S. Treasury yields, making the U.S. Dollar a more attractive investment. A higher U.S. Dollar tends to reduce demand for dollar-denominated copper.

Concerns over future demand from China were raised after S&P Global Rating downgraded China’s long-term sovereign credit rating by one notch on Thursday to A+ from AA-, citing increasing risks from the country’s rapid build-up of credit.

Weekly Technical Analysis

Despite three consecutive lower weekly closes, the main trend is still up according to the weekly swing chart. The market is still trading above the retracement zone target at $2.8405 to $3.7610 so momentum hasn’t shifted to down. Essentially, the market is going through a normal correction after a nearly three month rally.

Weekly Forecast

Two Gann angles come into play this week. The first is a downtrending angle at $2.9385. The second is an uptrending angle at $2.8825.

A sustained move over $2.9385 will signal the presence of buyers. This move could generate enough upside momentum to challenge the major Fibonacci level at $3.0230 and the next downtrending angle at $3.0585.

The inability to hold above $2.9385 will indicate the presence of sellers. The selling pressure will increase if the uptrending angle at $2.8825 fails as support. This could trigger a break into a pair of 50% levels at $2.8405 and $2.8250.

Look for the selling to extend into $2.7610 if $2.8250 fails.

Essentially, look for a bullish tone to develop on a sustained move over $2.9385 and for a bearish tone to develop on a sustained move under $2.8825.