The charts of copper prices on the London Metal Exchange (LME) indicate that the red metal continues its advance towards 2-year highs. This view is also held by Commerzbank, which has projected the June 2018 high as the next target, leaving the asset just shy of the 2014 peak.
According to Commerzbank’s Axel Rudolph, who is a Senior FICC Technical Analyst at the bank, the price moved towards the 2017 high and also the November 2020 high, leaving the peak of 2018 to lie just within its grasp.
Recovering but intensive demand from China remains the key driver in the recovery of copper prices, which at some point during the peak of the first wave of the coronavirus pandemic in March and April 2020, looked to be heading towards the precipice. However, control of the local coronavirus situation in China, recovering demand for copper as a result of reopened industries, and industrial actions in the copper-producing belts of South America have provoked a bull run of immense proportions.
With the possibility of emergency use approval for coronavirus vaccines from Moderna and Pfizer/BioNTech, the chances of further upside moves on copper price charts have been enhanced.
Today’s 1.67% upside move at the time of writing enables copper prices to make another attempt at breaking the 3.2710 resistance, after bouncing off support at 3.2560. If the breakout is confirmed, the next target for bulls would be the 3.3155 price level (June 2018 high), with the 3.3220 resistance of December 2017 also marking the next port of call if 3.3155 is surpassed.
On the flip side, we have to note the presence of the rising wedge, which may signal an impending reversal. This would not be out of place, given that traders would take profit at some point following such a hefty advance in price action. A breakdown of 3.2560, which intersects the lower edge of the wedge, is the signal for sellers to take over, driving prices to 3.1865 initially, with 3.1255 and 3.0920 lining up as potential downside targets.
