Comex High Grade Copper Price Futures (HG) Technical Analysis – Could Rally if Fed Drives U.S. Dollar Lower
December Comex High Grade Copper prices closed higher on Tuesday while consolidating inside the previous day’s range. The chart pattern suggests investor indecision and impending volatility.
Earlier in the week, the market fell to $2.9310, stopping just short of a major retracement zone and a pair of main bottoms on the daily chart. This retracement zone represents value and could be attractive to new buyers if tested.
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The main retracement zone is $2.9150 to $2.8525. Inside this retracement zone are a pair of main bottoms at $2.8935 and $2.8795.
The new short-term range is $3.1785 to $2.9310. If buyers start to drive the market higher, then its retracement zone at $3.0550 to $3.0840 will become the primary upside target.
The price action this week suggests investors are waiting for the Fed to make its monetary policy announcements on Wednesday. This news should have an effect on the U.S. Dollar which should move the dollar-denominated copper market. Copper prices could rally if the Fed is dovish and the dollar weakens.
On the bearish side of the market, rising London Metal Exchange and U.S. stocks are placing a significant headwind on the industrial metal. Additionally, the recent build in stocks does little to signal any shortage of material, as the industry continues to work through ample scrap availability brought out by higher prices.
However, the bullish hedge funds are providing support for copper due to improving demand and supply disruptions that should tighten the supply/demand balance.
Given the current state of the fundamentals and the daily chart pattern, it looks as if December Comex High Grade Copper prices could become rangebound between $2.9150 and $3.0550.