Copper prices continue their pullback recovery as data from the CME Group indicates that open interest on copper futures rose by 3K contracts in the last week. Just like was the case last week, volumes declined, this time by 3.6K contracts.
The rise in open interest is the 3rd consecutive rise in 3 weeks and has allowed copper prices, battered by weakened coronavirus-driven demand, to claw back some of the losses of February and March 2020. Copper price on the XCUUSD pair now trades at 2.32562 per pound, representing a 0.39% gain on the day on the back of low trading volumes as the markets resume from the Easter weekend holiday.
Download our Q2 Market Global Market Outlook
Copper price action on the daily chart shows that the price action candle for Sunday April 13 violated the horizontal resistance at 2.30297, which is also the price level that corresponds to the 23.6% Fibonacci retracement from the swing high of 17 January to the swing low of 19 March. Today’s price candle was able to bounce off that price level and has pushed above it. If today’s candle closes above 2.30297, this confirms the breakout and opens the door for price to target the next resistance at 2.41494 (very close to where the 50% Fibonacci retracement resides). 2.49154 may also come into focus if copper prices can continue the recovery move.
On the flip side, resumption of the downside trend could occur from points that sellers identify as rally-sell price points. Therefore, rejection at any of the resistance targets mentioned above causes price to resume the downward trajectory, targeting 2.21109 and 2.13501. Depending on where the rejection starts, other support areas below the rejection point will all serve as initial targets.