Commodities

Technical Analysis – Copper futures retrace below cloud; bullish bias persists

Posted on October 27, 2020 at 3:58 pm GMT

Anthony Charalambous, XM Investment Research Desk

Copper futures’ recent pullback from the 28-month high of 3.213 appears to have been muted by the 100-period simple moving average (SMA) around 3.068. The retreat slipped under the 50-period SMA at 3.113 and the Ichimoku cloud, where the price seems to have slowed its downward pace. The falling red Tenkan-sen line suggests strengthening negative momentum, while the flattening blue Kijun-sen line is conveying a stalling in the withdrawal from the recent peak.

The short-term oscillators reflect the slight improvement in the commodity. The MACD has seized its downwards trajectory below zero and is nearing its red trigger line, while the RSI and stochastic oscillator are struggling to maintain positive progress. Nonetheless, the dictating bullish tone of the SMAs remains relatively undamaged, endorsing the neutral-to-bullish bias.

To the downside, early constraints may arise from the tough support section of 3.068 – 3.073, which also includes the 100-period SMA. If the bears manage to steer beneath this border, they may hit the 3.052 low prior to challenging the 200-period SMA at 3.040. If the 200-period SMA fails to dismiss the decline, the commodity may meet the 3.022 troughs ahead of the 3.007 barrier.

Otherwise, if buyers re-emerge, initial resistance may come from the red Tenkan-sen line at 3.097 and the 50-period SMA at 3.113 overhead. Marginally above, the cloud’s lower surface at 3.118 may impede the commodity from advancing further towards the blue Kijun-sen line at 3.143 and the neighbouring 3.158 obstacle. Another jump higher may reach for the multi-month peak of 3.213, before additional gains meet subsequent resistance at the 3.285 mark.

Summarizing, in the short-term timeframe, copper futures maintain a neutral-to-bullish tone above 3.068 and the 200-period SMA. That said, a dip underneath 3.022 may strengthen negative tendencies.

HGCOP

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