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Copper Price buckles As Bearish Sentiment gains weight

The Comex Copper price is set to finish the week lower as traders reduce exposure ahead of a potentially volatile week-long Chinese Holiday. Comex High-Grade Copper futures are trading at $4.1705, down 2.65% on the week, 15% below the April all-time high of $4.8880.

At the start of the year, supply disruptions, loose monetary policy and a global decarbonization push caused Comex copper to surge to its highest ever price. But over the last few months, several bearish developments have emerged. As a result, Copper is starting to look vulnerable to a correction.

Due to the country’s energy crises, Chinese factory activity in September slowed for the first time since March 2020, leading to a slowdown in Copper demand. Furthermore, Chinese futures traders will be away from their screens next week, leaving the Copper price prone to volatility. This is significant considering the ongoing debt-ceiling negotiations in Washington. Congress can’t agree on a deal to extend the $28.5 trillion spending cap, which could lead to a historic US default on the 18th of October. Although the odds of a default are low, risk assets are starting to roll over, causing the US Dollar to spike to a one-year high, putting further downward pressure on Copper.

Copper Price Forecast

The copper price is below the 50 and 100-day moving averages and grappling with the 200-day at $4.1618. If the price ends below the 200 DMA today, it will confirm yesterday’s breakdown and potentially lead to heavy liquidation next week. Which considering the Chinese holiday, it could gather pace . In that event, the first level of support is a rising trend line from March at $3.9950. Coincidentally, at that level, the weekly chart also starts to look unfavourable. If that happens, Copper could drop another 10% to the December $3.7340 high.

The bearish view relies on the price finishing today below the 200 DMA. Therefore, If the price manages to close the week above $4.1618, it may get a reprieve. Furthermore, a debt-ceiling agreement over the weekend would avert a potential crisis and alleviate some price pressure. On the other hand, if the stalemate persists into next week, the bearish pressure will intensify, and the price action could get ugly.

Comex Copper Price Chart (daily)

copper price

Comex Copper (Weekly Chart)

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