The price of copper hit its lowest trading level since 2021 this week as the news that fresh lockdowns in Shanghai caused a further shock to commodities that are linked to global growth.
I do believe another rally is coming in copper prices as the upcoming talks between Russia and the Ukraine looked doomed to fail between the President of Russia and the President of Ukraine on July 13th.
Furthermore, there is the threat the Russia is going to change the status of the situation in Ukraine from a “special mission” to “war”. Such a statement could cause a major flight in gold. But maybe not copper.
Copper is now at huge support. The red metal is now testing the former breakout zone from 2021. Once copper broke the $330.00 price zone in 2021 it soon raced towards the $500.00 level.
Technical analysis is still pointing towards the $300.00 level as a possible price target if a breakout under $330.00 takes hold. This is something that I have been expecting could happen for some time if we see fears of recession.
Sentiment towards copper has been the biggest risk in the market over recent months as the market turned heavily bullish towards the red metal. The herd has now flipped to even more bullish
According to the ActivTrader platform some 83 percent of traders are bullish towards Copper. With the current bullish sentiment bias towards copper, I believe more short-term downside in the red metal seems the most likely scenario.
Copper Short-term Technical Analysis
The four-hour time frame shows that copper has formed a Wyckoff distribution type pattern. These types of patterns are known to be bearish reversal patterns.
It is also noteworthy that the $300.00 resistance level is a big psychological barrier that needs to be broken to accelerate the breakout momentum in the red metal.
Copper Medium-term Technical Analysis
The larger picture for copper prices remains extremely bullish due to the presence of a massive inverted head and shoulders pattern that holds a substantial upside price target.
It should be noted that the risk is that the pattern is invalidated and copper falls towards the $200.00 support level and then forms a huge bearish head and shoulders price pattern.