September Comex High Grade Copper futures rallied last week on reports of easing inventories and the news that workers voted to strike at a mine in Chile, raising supply concerns. The weaker U.S. Dollar also led to increased demand from foreign buyers. Copper is a dollar-denominated commodity and when the dollar weakens the industrial metal tends to become more attractive to international buyers.

Copper prices were also underpinned after China posted stronger-than-expected June trade figures. This was fueled by firm global demand for Chinese goods and robust appetite for construction materials domestically, but local curbs on lending could weigh on imports later this year.

Additionally, workers at the Zaldivar copper mine in Chile, owned by Antofagasta Plc and Barrick Gold Corp, will resume talks with Antofagasta after voting to strike earlier this week, the union said. Traders will be watching this event closely this week because an end to the strike could limit gains or even lead to increased selling pressure.

Finally, the U.S. Dollar sold-off on Friday after U.S. government reports on consumer inflation and retail sales disappointed investors and raised doubts about the Fed’s ability to raise interest rates later this year.

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. A trade though $2.7185 will signal a resumption of the uptrend. A move through $2.7425 will reaffirm the uptrend.

The main range is $2.8495 to $2.4850. Its retracement zone is $2.6675 to $2.7105. This zone has stopped the market from rallying further the last three weeks. Last week’s close inside this zone suggests that buyers may make another attempt to breakout to the upside.

Forecast

Based on the close at $2.6910 and the price action the last three weeks, the direction of the copper market this week will be determined by trader reaction to the Fibonacci level at $2.7105.

A sustained move over this level will indicate the presence of buyers. This could lead to a test of the downtrending angle at $2.7395. Besides being potential resistance, this angle is also the trigger point for an acceleration into the next downtrending angle at $2.7945.

A failure to overcome $2.7105 will signal the presence of sellers. This could fuel a break back into a series of levels including an uptrending angle at $2.6850, a 50% level at $2.6675 and another uptrending angle at $2.6490.

The last angle is the trigger point for an acceleration to the downside. If it fails, we could see enough selling come in to drive the market back into a pair of uptrending angles at $2.5890 and $2.5850.