Comex High Grade Copper Futures (HG) Technical Analysis –

September Comex High Grade Copper futures continued to hold above four-month lows on Tuesday as the dollar steadied following comments by a Federal Reserve official suggesting fewer U.S. interest rate hikes were in the cards.

On Monday, St. Louis Fed President James Bullard said the U.S. economy may only need one rate hike for as long as 2 ½ years. A weaker Greenback tends to boost demand for dollar-denominated commodities by making them cheaper to foreign investors.
A drop in demand from China and growing inventories in Asia continue to put a cap on any rally. Additionally, reflecting a bearish sentiment, hedge funds and money managers raised their net short positions in COMEX copper contracts to the biggest on record, according to the U.S. Commodity Futures Trading Commission.

Technically, the main trend is down according to the daily swing chart. A trade through 2.1480 will turn the main trend to up. A move through 2.0180 will signal a resumption of the downtrend.

The main range is 2.3060 to 2.0180. Its retracement zone at 2.1620 to 2.1960 is the primary upside target.
The short-term range is 2.1480 to 2.0180. Its retracement zone at 2.0830 to 2.0985 is currently being tested.
Based on Monday’s close at 2.0970, the direction of the market today is likely to be determined by trader reaction to a resistance cluster at 2.0980, 2.0985 and 2.1010.
Taking out 2.1010 with conviction will signal the presence of buyers. This could trigger a surge to the upside since the next potential target is the main top at 2.1480. Taking out this top will change the main trend to up and could create enough upside momentum to challenge the main 50% level at 2.1620.
A sustained move under 2.0980 will indicate the presence of sellers. The first target is the short-term 50% level at 2.0830. This move took place earlier in today’s session.
A break through the 50% level at 2.0830 will indicate the selling is getting stronger. This could trigger an acceleration to the downside with the next target angle coming in at 2.0580.
Look for an upside bias to develop on a sustained move over 2.1010 and a downside bias on a sustained move under 2.0830. The direction of the U.S. Dollar is also likely to influence the movement in copper prices. A stronger dollar will likely keep a lid on a rally. A weaker dollar could help trigger a breakout rally.
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