A stronger dollar is hurting risky commodities on the day, sending spot copper price lower by 2.67%. The drop below the $3 per pound mark for the first time in nine trading sessions follows a rise in copper inventories at SHFE warehouses. Open interest data on copper also show that speculators have increased short positions on the red metal. However, the downside on copper price action may be capped as stocks remain low at the warehouses of the London Mercantile Exchange (LME). Copper premiums in Germany and China are also down this week as supply outstrips demand.
The daily chart shows that price action on the continuous copper price futures asset continues to respect the borders of the evolving rising wedge pattern. The latest price move for the day has a copper price wave in a corrective move towards 2.9795, where it has found support. This level also marks the point of intersection between the wedge’s lower border and the horizontal price support. A breakdown of this area allows the copper price to target the 2.8695 support, with 2.8020 and 2.7720 lining up as potential targets to the south.
On the flip side, a bounce from present levels allows copper price to maintain the consolidation within the wedge’s borders. Still, the move towards the opposing edge has to breach the 3.0275 and 3.0920 resistance levels. The upper boundary of the wedge intersects the 2020 highs at 3.1255. This is the target that needs to be breached to establish the higher high that negates the wedge. Attainment of 3.1865 fulfils this expectation.
