Copper price could be on the pathway to a significant swing higher if the outlook for Credit Suisse plays out in the market. Already, the price activity on the daily chart of the XCUUSD pair appears to have completed a bullish flag pattern, if the price pattern from mid-June till date is to be considered.
The analysts at Credit Suisse have also noted this pattern, and that is why the bank has provided a bullish outlook on the asset. Furthermore, the fundamentals for copper are also looking bright. Slow easing of the lockdowns in the key producing areas, as well as the recovering demand in the primary consuming nation (China), means that there will be a substantial demand tilt and this is a price hiking factor.
Here are key quotes from the analysts at Credit Suisse.
“Copper is breaking out from a bullish ‘flag’ continuation pattern. Above the current cycle, high and long-term downtrend at $6633/65 is still probably needed to reinforce the break to add further upside momentum.”
Technical Outlook for Copper Price
Why are analysts providing such optimistic guidance for copper price? It is probably due to the length of the pole; the bullish price activity that precedes the consolidation flag area that retraces against this uptrend. The pole started from 2.5195 and terminated at 2.8695, a distance of nearly 3500 pips.
Typically, the breakout move is equivalent to the trend move that preceded the consolidation area. If this holds, then there could be a lot of upside movement left in the breakout move. The breakout move has to contend with resistance levels at 2.9795, 3.0920 and 3.1865 in that order. The measured move of the pattern could extend beyond 3.1865 before it is completed.
On the flip side, rejection at 3.0920 could allow for a retest of 2.9795, with 2.8695 and 2.8020 forming additional support targets.