Commodities

Technical Analysis – Copper futures’ 2-week pullback from lows loses steam

Posted on February 19, 2020 at 3:50 pm GMT

Anthony Charalambous, XM Investment Research Desk

Copper futures are facing renewed selling interest, though prices are currently seeking support from the 2.5780 level – which is the 23.6% Fibonacci retracement of the down leg from 2.8819 to 2.4839 – and the 100-period simple moving average (SMA) just below it at 2.5740.

Looking at the short-term oscillators, negative momentum appears to be picking up. The MACD, currently at the zero mark, is only just below its red trigger line and seems to be trying to move into the negative zone, while the RSI is falling in the bearish territory.

To the downside, immediate support could come from the 23.6% Fibo of 2.5780 and the 100-period SMA at 2.5740. Diving under the 100-period SMA, the 2.5624 low could provide some hindrance ahead of the troughs of 2.5360 and 2.5290 from February 10 and 4 respectively. Breaching these obstacles, the commodity could revisit the area of supports around the five-month low of 2.4839.

If the 100-period SMA denies further losses, buyers could encounter initial resistance from the 50-period SMA, joined by the lower Bollinger band around 2.5895 ahead of the mid-band at 2.6080. Moving higher, the region from the fresh swing high of 2.6284, coupled with the upper Bollinger band, to the 38.2% Fibo of 2.6358 could prevent the ascent from reaching the January gap and the 50.0% Fibo of 2.6825 overhead.

Overall, a negative move looks to be developing in the very short-term and a break below the 100-period SMA at 2.5740 would reinforce it.

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