Copper prices witnessed a smart recovery yesterday amid some buying activities ahead of more cues on Chinese stimulus measures. Prices recovered some losses as traders awaited more signals from major importer China.
Chinese officials are expected to outline more stimulus measures later in the day, particularly measures aimed at shoring up domestic spending, as well as the property market.
After GDP sharply slowed in the second quarter, the top copper importer in the world is battling to support a post-COVID economic recovery this year. According to recent figures, the economy had a slow start to the third quarter.
Adding to this, the U.S. dollar index weakens against its major counterpart after U.S. weekly unemployment data, also supported by recent gains.
U.S. Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 227,000 for the week ended July 29, the Labor Department said and the factory orders increased 2.3% after rising 0.4% in May which is the largest increase since January 2021.
Today, US non-farm payroll data in July are set to release which will determine the direction for the metals prices.
Technical Outlook
Copper prices witnessed a smart recovery from 733.60 and settled at 746.25, with an intraday gain of 1.24%. In past trading sessions prices retreated from a two-month high of 757.75 and dropped towards the low of 735.60.
On the above chart, prices managed to hold above their crucial support of 733.00 and formed a bullish engulfing candlestick pattern, both of which indicate that a bullish trend will resume in the near future.
Hence, a break above 746.20 will lead prices towards 755-760 very soon. Else, any dip towards 740-738.00 will attract buying activities with a stop loss below 732.80
Alternatively, on the downside, a break below 732.80 only will drag some pressure and prices may retest immediate support 726.50-720.00