Easing demand from China, signalled by a reduction in its import premium, as well as an increase in speculative short positions as revealed by open interest data from CME, is helping copper prices weaken further this week. New virus worries, as well as a firmer greenback, are also pressurizing risky commodities, as risk aversion takes hold of markets on Thursday.
According to a commodities broker with Marex Spectron, investors were scaling back on their risk exposure as hopes of further US stimulus before the November 3 US elections fade.
Copper price is presently trading 2.16% lower on the day and has touched off intraday lows of 2.9135.
Technical Outlook for Copper Price
As expected, the wedge is now firmly in resolution as the daily candle has broken below the lower edge of the rising wedge pattern. However, price is now at a price level where daily candles of July 30 – August 7 formed highs. So realistically, there has to be additional follow-through selling to establish a drop below this price area. This also sets up a 3% penetration close below the wedge’s border, thus completing the breakdown of the wedge pattern.
This price move would then target the 2.8695 level, with 2.8020 and 2.7490 lining up as additional targets. The latter may complete the measured move from the pattern’s breakdown point.
On the flip side, a lack of follow-through selling may allow copper prices to attempt a pullback to the broken wedge border. If the price can get back into the wedge, then 3.0275 and 3.0920 will come calling as possible targets to the upside. Only a break of 3.1255 would negate the breakdown move as it establishes a higher high that signals a resumption of the uptrend.
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Copper Price Chart (daily)
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