Copper Price May Be Due for a Short-Term Correction

Summary:

Copper price appears to be on the path to a correction in the short term, as a rising dollar and overextended prices weigh on the asset.

Copper price is trading higher today but has had to endure a day of choppy trading, as traders oscillate between a stronger US dollar and a return of risky sentiment.

Copper prices took a backseat on Friday after the US Non-Farm Payrolls report added strength to a US Dollar that was already riding high from stronger US 10-year bond yields. Some institutional analysts on the sell-side of the equation have already pointed to a possible correction in copper price before a surge to new highs. Price action on the daily chart shows that the price activity is currently being defined by the descending channel, with the active candle restricted by double resistance points.

Technical Levels to Watch

The active daily candle has found resistance at the ascending trendline, which initially functioned as support until it was broken on Thursday, March 4 and now functions as resistance in role reversal. This candle has also found support at 3.9970, following a day of choppy trading.

Further correction in copper price has to follow a breakdown of 3.9970, targeting 3.9535 initially. 3.8340 and 3.7945 form additional targets to the south.

On the other hand, bulls will probably find some momentum if the price breaks above the ascending trendline and the channel’s return line, which targets 4.2015 initially. 4.2755 then becomes the only barrier that lies before 4.3995, with a breach of the 25 February 2021 top opening the door to this level.