Copper Technical Analysis – Watch this major triangle pattern

Global growth seems to be
more and more in peril as the economic data for many advanced countries is
starting to roll over and some even continues to slip further contraction. The
Chinese authorities don’t look intentioned to flood the economy with more stimulus
as the PBoC underdelivered on the rate cuts front recently. The global PMIs
continue to contract and recently even the services sector slipped into
contractionary territory for many major economies. The central banks are
resolute to keep monetary conditions tight for as long as necessary to bring
inflation down, so there won’t be any help coming from them in the near future.
Yesterday we even got big misses in the US Job Openings and Consumer Confidence
data which is potentially a signal that we are about to see more weakness in
the labour market.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that we have a major
triangle pattern forming
and the next big move will come when we’ll see a breakout on either side. We
already got one try to break to the upside that was rejected soon after leaving
behind a fakeout, which is generally a reversal signal. The price is now at a key level and a break to
the upside should take the price into the downward trendline, while a
strong rejection is likely to lead to a selloff into the upward trendline.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had a divergence with the
MACD when
Copper was approaching the upward trendline, which is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, we
got a strong bounce that extended all the way up to the high of the divergent
price action.

This is generally where the price finds a strong resistance and we
can see that we have also the confluence of the
previous support turned resistance and the
50% Fibonacci retracement level.
The sellers should step in here with a defined risk above the level and target
a break below the upward trendline. The buyers, on the other hand, will want to
see the price breaking higher to target the downward trendline and eventually a

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the resistance zone and we can also notice that we have another
divergence right at the resistance, which should increase the chances of a
reversal. If the price extends to the upside, the last line of defence for the
sellers will be the downward trendline and the 61.8% Fibonacci retracement
level. If the price starts to fall from here, we should see the sellers piling
in even more aggressively if the price breaks below the last swing low at
3.7632 as it would confirm also the double top pattern.

Upcoming Events

This week is an important one given that we will see
many key labour market data for the US, including the NFP, before the next FOMC
meeting. Weak data is likely to cause recessionary fears across the markets and
weigh on Copper, so it will be crucial to focus on the data. Today, we have the
US ADP report, and after yesterday’s big miss in the US Job Openings, a weak
report is likely to increase recessionary fears. Moving on to tomorrow, we will
see the US Jobless Claims and the US PCE data. Finally, we conclude the week
with the US NFP and the ISM Manufacturing PMI on Friday.

This article was written by FL Contributors at Source