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The price of copper has been holding above the $400.00 support level despite massive price drops in the value of gold and silver after last week’s stronger than expected July jobs report from the United States economy.
Copper prices have been holding up due to fears about supply disruptions at the world’s biggest copper mine, Escondida, with financial markets worrying about the risk of a labour strike.
According to the latest report, a deal may be on the table, as BHP Group Ltd and the union at its Escondida copper mine in Chile said they had reached a tentative agreement for a new contract, although the union will take two more days to submit the new contract to a vote by workers.
Other factors are also in play in regard to what is keeping copper price above $400.00 while other precious metals falter, namely the infrastructure bill from the US economy, rising inflation, and also COVID-19 fears, which threatens global copper supply.
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 heavy net bearish, which is a great contrarian sign for copper prices.
According to the ActivTrader platform some 60 percent of traders are bearish towards copper. With the current sentiment bias towards copper still bearish, I believe more gains in the red metal remains possible.
Copper Short-term Technical Analysis
The four-hour time frame shows that a large head and shoulders pattern has formed, with bears needing to move the price under the $410.00 level to ignite the pattern.
It is also noteworthy that a double-bottom pattern could form if sellers fail to break under the $410.00 level. If this is correct any moves lower could be a buying opportunity for another shot at $450.00
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Copper Medium-term Technical Analysis
The larger picture for copper prices remains very bullish, and continues to show a massive inverted head and shoulders pattern on the weekly time frame, with the price the neckline of the pattern, around the $400.00 level.
Additioanlly the Commodity Channel Index indciator shows that copper is oversold technically, meaning it cold be a good time to buy copper over the medium-term.
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