Copper prices initially took a dip on Tuesday as the US Dollar strengthened on waning risk sentiment. However, positive sentiment on the red metal as a result of China’s import boom allowed buyers to regain the momentum, midway into the New York session.
Copper prices ended Monday’s session higher, but a collapse in risky sentiment led to a price gap at the open of Tuesday’s session, with further losses seen in the London session before the late recovery.
Outlook for copper prices heading into the coming months remains bullish, as Chinese demand is expected to grow. A coronavirus vaccine is a game-changer, as it will mean that lockdowns will no longer be needed once a good proportion of the healthy workforce receives a preventive vaccine.
Data from the CME indicates that speculators are raising their bets on higher copper prices, with net longs on the LME contract rising to 6.3% of all active contracts.
Copper prices are marginally lower by 0.32% as at the time of writing, but well off intraday lows.
Technical Outlook for Copper Futures
Today’s bounce on the ascending support trendline confirms the continued restriction of price within the borders of what is now panning out to be a rising wedge. This move also found support at 3.0920 and has propelled copper price above 3.1255, intending to hit 3.1865. However, failure of price to climb beyond this point converts the price pattern into a double top (peaks of 21 October and 9 November). This would place the 3.0275 price area as the neckline.
A break below the neckline then targets 2.9165 as the price projection of the double top’s resolution, which requires sellers to take out the wedge’s lower border, as well as 3.0010 and 2.9510.
On the other hand, buyers would look towards a break of 3.1865 to continue the recovery towards 3.2560 and 3.2710. Clearance of the latter would probably invalidate the wedge in the long run.