March Comex High Grade Copper futures reached its highest high since November 1 on Friday while posting its fifth consecutive higher close. The catalyst behind the rally was a weaker U.S. Dollar, although investors remained concerned over demand from top consumer China.
Low volume also contributed to the rally so it will interesting to see if the upside momentum can be sustained when the major players return on Monday. They are going to have to decide if the stronger dollar is driving the price action at this time, or if worries over demand from China as the government takes steps to reduce risks in the financial system will be the main drive of price action.
Daily Swing Chart Analysis
The main trend is up according to the daily swing chart. The trend turned up last week when investors took out the previous main top at $3.1565. This price is new support. A break back under it will signal that the selling is greater than the buying at current price levels. However, this may only lead to a correction. The main trend will change to down on a move through $3.0550.
The short-term range is $3.2790 to $3.0550. Its retracement zone is $3.1670 to $3.1935. This zone is controlling the short-term direction of the market.
The main range is $2.9135 to $3.2790. Its retracement zone is $3.0960 to $3.0530. This zone is controlling the longer-term direction of the market.
Daily Swing Chart Forecast
Based on Friday’s close at $3.1915, the direction of the copper market on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at $3.1935.
A sustained move over $3.1935 will signal the presence of buyers. If the volume increases on the move then this could generate the upside momentum needed to challenge the October 16 main top at $3.2790.
A sustained move under $3.1935 will indicate the presence of sellers. This could drive copper into the short-term 50% level at $3.1670. This is a possible trigger point for an acceleration to the downside since the next major support doesn’t come in until $3.0960.
Watch the price action and read the order flow at $3.1935. Trader reaction to this level will tell us if the buying is getting stronger, or if sellers are retaking control.
This article was originally posted on FX Empire