Copper prices firmed slightly on Monday to 2.9830, or 0.4% higher from Friday’s close, as the US Dollar lost steam in Monday’s trading sessions. The rise in copper prices also occurred as speculators raised their net longs on copper. The drop in the greenback is seen in the US Dollar index, which was down 0.4% in Monday’s trading.
Also adding to the slightly bullish sentiment is the continued state of inventories at the warehouses of the London Mercantile Exchange, which continue to remain low. LME warehouse inventories had dropped to 13-year lows in August 2020. At the time, LME stockpiles held less than 100,000 tonnes. The levels have not recovered much since then as recovering demand from China has mopped up most of the supply from the recovering mines in South America, leaving inventories depleted.
Copper price action broke below the rising wedge pattern last week on the daily chart. However, price is in pullback mode as a lack of follow-through selling has occurred. Today’s intraday high tested the lower edge of the wedge, but failed to move above it. This situation leaves price continuing to hover around the 2.9795 price level, which is acting as the resistance to the pullback move, having been broken as support by Thursday’s breakdown of the wedge.
If sellers re-enter the fray following the rejection of the pullback, then copper price could be on its way towards 2.8695, with 2.8020 also lining up as a potential support target.
If prices continue to drive higher and break the 2.9795 resistance, then 3.0275 becomes the new target. A move above 3.0275 potentially invalidates the wedge pattern, but time will tell how the price moves eventually play out.
