Copper Technical Analysis

<p>Copper has been declining ever since the "China
reopening" trade failed. Disappointing economic data from China, coupled
with the lack of action from officials, contributed to this downturn. However,
more recently, the <a href="https://www.forexlive.com/centralbank/pboc-loan-prime-rates-lpr-cut-1-year-355-prior-365-5-year-420-prior-430-20230620/">People's Bank of China</a> (PBOC)
proceeded with cuts to its benchmark rates, but the market sold off after the
fact as the market may have wanted to see more. The global manufacturing sector
remains in a downturn due to tighter monetary conditions and weaker demand. All
else being equal, we can expect more downside for copper going forward. </p><p>Copper Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that the recent
rally from the 3.5475 support has
stalled at the 3.9575 swing resistance and sold off in what seemed a “sell the
fact” trade after the PBOC cut the LPR rates. Copper has now fallen below the
previous 3.8245 resistance and the <a href="https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/">moving averages</a> are
threatening a crossover. What happens here will be key for the copper market. </p><p>Copper Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that copper has
been trading cleanly within a rising channel coming towards the 3.9575
resistance. The last leg higher <a href="https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/">diverged</a> with the
<a href="https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/">MACD</a> in what
could have been a good signal that the price was about to reverse there. In
fact, copper started to fall and as soon as the price broke below the lower
bound of the channel, momentum sellers jumped onboard and extended the selloff
into the 3.7730 level. </p><p>Copper Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that we
have another divergence with the MACD and the price action formed what looks
like an <a href="https://www.forexlive.com/Education/chart-patterns-guide-20220125/">expanding wedge</a>
pattern. From here we should see the price rallying back into the swing high
level at 3.8440 where we can also find the 38.2% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci
retracement</a> level of the entire since the 3.9575
resistance. The sellers will be waiting at the 3.8440 level with a defined risk
above and target a new low into the 3.72 level. The buyers, on the other hand,
will want to see the price breaking higher to pile in and extend the rally
towards the 3.9575 resistance first and eventually the 4.1855 swing high.</p>

This article was written by FL Contributors at www.forexlive.com.