Copper Price Forecast: 20-Day Support Keeps Recovery Setup Alive

20-Day Average Holds as Buyers Return

Copper futures pulled back to a successful test of support at the 20-day moving average on Thursday, reaching a seven-day low of $6.496 before buyers took back control. That decline completed a 61.8% Fibonacci retracement of the prior upswing. The session is set to end with a bullish hammer candlestick pattern with a lower daily high of $6.639.

Given the bullish reaction and the early establishment of dynamic support near the 20-day moving average during the prior pullback in late July, copper is showing an improvement in short-term momentum if support holds above Thursday’s low. This places added importance on Thursday’s low, as a near-term test of whether buyers can maintain control.

Failed Breakout Leaves Door Open

An attempted breakout above an 11-week basing pattern was made last week with a rally above the prior high of $6.716 from May and a new trend high of $6.867. The breakout failed to confirm and instead the week closed below that high but the higher weekly high and higher weekly low were sustained. That week’s low of $6.451 is now important near-term support, as a decline below it would signal increased downside risk. For now, the ability to hold above that low leaves the broader consolidation breakout potential alive despite its initial failure.

Although copper was unsuccessful during the recent breakout attempt, another try may have greater success. If that were to occur, Thursday’s low may be the lowest traded price for copper before new highs are attempted again. Also, the day’s low establishes an important short-term support level. If it fails as support, the weekly reversal signal could trigger and drive copper towards a test of support near the 50-day moving average, currently near $6.373. Therefore, the $6.496 level provides an immediate bullish-or-bearish pivot, while $6.451 represents more important weekly support.

Another Breakout Attempt Takes Shape

If the bullish scenario unfolds, short-term weakness into Thursday’s range could see signs of strong relative demand in anticipation of a further advance from support near the 20-day moving average. It is not uncommon for a test of support at the 20-day moving average to precede a consolidation breakout. That doesn’t mean it will occur, but it supports another breakout attempt. A successful hold of support would therefore keep the recent basing breakout attempt in play and allow buyers another opportunity to challenge the recent high.

$6.867 Stands Between Copper and Higher Targets

This week is set to end with a relatively narrow range inside the range from last week. This shows weekly consolidation and therefore key levels for identifying strengthening or weakness. This week’s high is $6.714 and the low is $6.496. An initial upside target is around $6.946, followed by $7.206 using Fibonacci projections and extension levels. A move toward those targets would require copper to first clear the recent high of $6.867.