Copper False Break
After breaking out above the 3.7300 level for the first time since June earlier this month, Copper prices have since reversed back below the level and are now sitting back within the 3.4445 – 3.7300 range which has framed price action over much of the last six months. The big driver behind the reversal lower has been the shift in optimism around China reopening story.
Shifting China View
Copper futures were seen rallying in response to growing speculation that China was on the path to abandoning its zero covid policy and reopening the economy. However, over the last week this story has totally changed with news of fresh lockdowns announced in China amidst record covid cases and fresh covid deaths. With traders now fearful of further such lockdowns over the coming months, the demand outlook for copper has been materially impacted.
Lockdowns Key For Copper
Looking ahead, copper traders will be keeping a close eye on covid headlines coming out of China. If the initial 5-day lockdown announced in Zhengzhou province ends as signalled, copper prices should bounce back. However, if the lockdown is extended, this will be heavily bearish for price near-term.
Technical Views
Copper
The reversal back under the 3.7300 level has stalled for now with price attempting to push back above the level. Momentum studies remain mixed here, signalling plenty of two way risk. If bulls can get back above the 3.7300 the focus will then turn back to the next upside objective at 4.1185. While below 3.7300, however, the 3.3445 level is the next support to note.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.