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Are copper prices bottoming out?


Are copper prices bottoming out?

It’s the end of the week and on 02nd June, Friday, we have copper updates lined up for you. 

Along with gold, copper also saw low levels on Friday as there are anticipations of the release of Non-farm payroll data. More cues on the US economy are expected to arrive to analyze the fluctuation in the commodity. 

As the China manufacturing data was not as expected, the notion has been weighing heavy on the industrial metal prices. Copper has recently sunk to a 6 month low following the news of the manufacturing activity data received from China.

However, by the end of Thursday, copper saw a sharp rise after a private survey appeared on the market. The red metal showed a lot of resilience in the country’s manufacturing sector, which catapulted its recovery this year. 

Copper futures fell 0.3% to $3.7030 a pound on Friday after rallying 2% in the prior session. 

However, traders must look at the copper data intently cause, the outlook for copper remains flat this year. Due to signs of manufacturing activity steadily declining amidst the pressure from high-interest rates and inflation issues. 

Here’s a technical analysis of the current trend of copper. 

Technical Outlook:

We have seen a drastic fall in Copper prices since 17 April 2023. Prices have dropped more than 10%. From the peak of 797.50 to last week’s low of 692.95. That was the lowest level after December 2022.

Now, prices have paused their recent fall and were able to recover. Prices have bottomed out from the low of 692.95 and inched higher towards 721.00.

The recent momentum has formed an inverted head & shoulders pattern. Which is a sign of trend reversal in the near future.

However, prices would need to break above their immediate resistance of 721.50 for further gain. Above it, prices may test the next resistance 728-735.00 very soon.

Alternatively, failure of the break will lead to pressure and prices appear to retest 710-702.50 on the downside.

Crucial support is intact at 692.00 and below only, prices may show a new crunch.

Hence, we expect that after a drastic fall in the last one and a half months, copper prices may witness a short-term recovery rally and may trade above its previous low 692.50.

 Traders should go log above 721.50 for a target of 735-745.00 With a stop loss below 713.50.

In addition, today’s US jobs report and the final round of Fed negotiations before the policymakers’ pre-Federal Open Market Committee (FOMC) blackout period could influence prices.