Copper Price is Ripe For a Bullish Breakout to $3.40 – Chart
Copper price is up by more than 0.35% today as traders bet on a recovery of the world economy as the number of Covid cases in some countries starts to fall. The metal is trading at $3.1610, which is higher than last week’s low of $3.0235.
Copper is often viewed as a barometer of the world economy because of its crucial use in the electrical industry. Therefore, its price tends to decline when there are risks to the global economy. Indeed, in the final week of October, copper price dropped by more than 6% as the number of Covid cases continued rising.
Copper price has risen in the past six consecutive days as traders move past the Covid crisis. Indeed, while the number of new infections is rising in the United States, it has started falling in some countries like France and Germany. This is a signal that the world will emerge from the current phase stronger than after the first wave.
Also, copper price has risen because of the fact that the Chinese economy is recovering at a faster pace than most analysts were expecting. This is important because China is the biggest consumer of copper in the world. Just last week, China announced a new ban on Australian concentrate, which is an important component of copper.
Meanwhile, the metal is also reacting to the US election. Analysts believe that the world economy will do well during his term because of improved relations between the US and other countries. That will be a sharp contrast to Donald Trump’s trade wars.
Copper price technical outlook
On the daily chart below, we see that copper price has been on a strong uptrend since March, when it declined to an intraday low of $1.970. It has jumped by more than 63% during this time.
It remains above the 50-day and 25-day exponential moving averages. Also, it is slightly above the ascending trendline that is shown in purple.
Therefore, I suspect that the price will continue rising as bulls aim for the YTD high of $3.22. A move above this resistance will see the price continue rallying and possibly test $3.40.