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Copper Price Forecast: Copper prices have almost fully recovered in July. But not quite yet, as there is still some technological resistance in the way. Since news from China that the government would release industrial metals stockpiles to moderate their separate rallies, the demand side hasn’t rebounded. Trading is a function of both price and time; technical ambiguity might be resolved by a price action corrective or by more sideways chop. Minor Recuperation So far, Copper prices have been under pressure since late May, when news emerged from China that officials will take action to prevent “unreasonable” price rise in industrial metals by releasing inventory. However, with the reduction in US Treasury yields and the push to new record highs (again) in US equity markets, risk appetite is on the rise, providing narrative relief for copper prices. However, the fundamental situation for copper prices hasn’t improved: “on-warrant stocks of copper in LME-registered warehouses have soared to their highest level since May 2020,” according to Reuters, “while Yangshan premiums of the metal moving into China lingered.” To put it another way, demand hasn’t yet absorbed all of the recent extra supply. As a cluster of technical resistance looms ahead, the gains seen since late June have only amounted to a small comeback thus far. DAILY CHART OF COPPER PRICE TECHNICAL ANALYSIS (March 2020 to July 2021) (PHOTO 1) “A return to the former yearly high reached in February at 4.3755 may be on the horizon before buyers get back into the market,” it was said in late May. Copper prices fell below the previous high at the end of June, but the level was recaptured in the first week of July as the market rose ahead of the 23.6 percent Fibonacci retracement of the 2020 low/2021 high range at 4.2000. Momentum indicators are still based on recent oversold levels for the time being. Copper prices are above their 5-, 8-, 13-, and 21-EMA envelopes on a daily basis, but they are not yet in positive consecutive order. The daily MACD is heading upward but stays below its signal line, while the daily Slow Stochastics are approaching overbought territory. A convergence of resistance appears to be approaching, with the July high at 4.4025, the ascending trendline from the late-February and March swing lows, and the ascending trendline from the September 2020 and February 2021 swing lows all lingering just below the February 2021 high of 4.3755. Copper prices would be put on a more confident bullish footing if they could break through this confluence of resistance. WEEKLY CHART OF COPPER PRICE TECHNICAL ANALYSIS (November 2008 to July 2021) (Picture 2) The viewpoint expressed in mid-February is still valid: “The breakout of copper prices above the falling trendline from the highs in February 2011 and June 2018 suggests that a multi-year bottoming process began in mid-2020. The aborted bearish breakout in early 2020, which saw the multi-year symmetrical triangle support briefly erased for a few weeks, supports this viewpoint.” ” Copper prices have a bullish bias as long as the uptrend from the swing lows in March and October 2020 is maintained.” —- Christopher Vecchio, CFA, Senior Currency Strategist wrote this article./n
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