Thursday's Market Minute: Copper Breaking Upward, But Stalling At Resistance

Copper futures are in an interesting situation this morning, as the /HG contract finds itself breaking above a downward sloping trendline beginning with the highs from Apr. 14. This slide took the /HG contract down more than -12% as of yesterday’s close, but it bottomed out near the old lows from late October and early November near 3.55. Now the bounce has taken copper above this trendline, but the move stalled out at a confluence of resistance, namely the intersection of the 21-day Exponential Moving Average, the low close from early January, and the highs from a recent congestion zone in May all aligning near 3.74.

Momentum also looks to be improving, as evidenced by the Relative Strength Index (RSI) making new highs with price. The indicator also showed some bullish divergence, staying above the 30 level that designates the oversold area as price continued to make new lows in recent weeks. This can be one possible sign of a coming bounce.

Still, copper has been trending down all year and it’ll take more than this move to change the overall price landscape. Major longer-term moving averages, such as the 63-day and 252-day Exponential Moving Averages, are still trending down and price has so far failed to take out the previous highs from mid-May. Look for a move beyond this level for signs of further upside. To the downside, look for price to hold the area between 3.55 to 3.58 or so; otherwise, price could fall to the congestion zone near 3.45 before seeing some potential stabilization.

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