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The price of copper started to break above the $400.00 level due to increased risk-on sentiment and due to the reality that COVID-19 restrictions are starting to ease in China.
With the breakout above $400.00 gathering momentum it seems that the trend in previous metals is spreading to copper price, which could move into a new and much higher time frame.
When copper demand is strong it normally means that the global and economy Chinese economy is starting to accelerate or is experiencing solid growth. Usually, the red metal is considered a proxy for global growth.
The country of China is where 52% of the world’s copper goes. A harsh recession there would badly hurt demand and could balance the market, though much of that consumption is for re-export in products.
Sentiment towards copper has been a big catalyst for copper prices. Sentiment towards copper is now extremely bearish, with retail appearing to be caught on the wrong side of the trade.
According to the ActivTrader platform 78 percent of traders are bearish. With the current sentiment bias towards copper, I believe more short-term upside in the red metal seems the most likely scenario.
Copper Short-term Technical Analysis
The four-hour time frame shows that copper has regained its short-term bullish bias and is now breaking above its key former range high, around the $395.00 level.
It is also noteworthy that a bearish head and shoulders pattern with a $40.000 upside is close to being invalidated. Invalidation of the pattern would be very encouraging in the short-term.
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Copper Medium-term Technical Analysis
The larger picture for copper prices remains bearish because the red-metal is now testing back towards the top of large ascending price channel.
At the moment the price of copper is testing trendline resistance, which has previously been a big rejection point for the red metal on previous breakout attempts.
I would suggest keeping a close eye on the $410.00 level for further breakout towards the $440.00 area or a rejection back towards the $395.00 level.
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