Copper has been trending down and has now reached the bottom of the downward trend channel. This has caused some reactions higher and the price has been consolidating since February 15th. The low of 2.42 is very close to the 2.40 level that used to act as a support in January 2007a and resisted an up move in 2009 for a few weeks. The level therefore has some psychological importance. The pivot candle was a Doji suggesting institutional buying below the current market price. At the same time there is bullish divergence as the price of Copper has been in a strong downtrend since October last year but Stochastics indicator has made a higher low. The nearest support and resistance levels are at 2.42 and 2.64. Should we get a rally higher in the coming weeks and months then 2.78 and 2.88 resistance levels would come into play.
Daily
Price is moving sideways below a resistance level at 2.64 and the upper Bollinger Bands that coincide with the level. Price rally to the resistance was rejected two days ago and the daily chart has now a shooting star candle confirming that the buyers are hesitant to push Copper above the level. The nearest support and resistance levels are at 2.53 and 2.64. The next level with significance is 2.48 where a Doji candle high and 1.5 Stdv Bollinger Band coincide.
240 min
Price is currently at the lower end of the rising regression channel and close to the mid-range support just above 2.53. However, the 4h chart reveals that price moves higher have been rejected again as evidenced by the shooting star candle from yesterday evening. This has a bearish indication and supports the short term bearish picture painted by the weekly and daily timeframes.
Conclusion:
As the price is still in a downtrend in weekly time frame and has recently risen to a resistance level where the upper Bollinger Bands are in the daily time frame it makes sense to expect it to move lower from here. This view is supported by the daily rejection candle (a shooting star) at the resistance level two days ago. The smaller time frame rallies could be used to sell this market with a view of covering the shorts when price approaches the daily Bollinger Bands near the 2.48 support level. The downside move in the longer term picture is quite extended and close to the bottom end of the descending trend channel coupled with the historically significant level of 2.40. This suggests that the price of Copper might either consolidate or once the lows are tested again rally higher over the coming weeks.
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Janne Muta
Chief Market Analyst
HotForex
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.