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The price of copper continues to trade around the $470.00 to $480.00 area due to uncertainty about recent mixed data economic data in China on the PMI front, and also soft U.S. data.
Recently, rising fears about global demand for copper caused a drop towards $330.00 area for copper prices. Beijing this week also ordered export controls on gallium, germanium and several of their compounds, which are used to make semiconductors and electronics.
The rules come just after the Netherlands announces new measures to limit China’s access to advanced chip manufacturing equipment. So far, copper has not been announced, but it is a major EV metal.
Poor economic growth or strong economic growth usually effects copper prices. The fact that copper is falling or remains under pressure from a technical perspective shows the concerns of the economy.
Sentiment towards copper has been a big catalyst for copper prices. Sentiment towards copper is now bullish, with retail appearing to be caught on the wrong side of the trade recently.
According to the ActivTrader platform, 76 percent of traders are bearish towards copper. With the current sentiment bias towards copper, I believe more short-term upside in the red metal seems the most likely scenario, but not that much upside.
Copper Short-term Technical Analysis
The four-hour time frame shows that copper only short-term bearish bias if copper continues to remain soft under the $385.00 level.
It is also noteworthy that the Ichimoku indicator does show the price of copper rallying above the Ichimoku indicator, however, there is no real buy signal until we see the Lagging Line crossing the cloud.
Copper Medium-term Technical Analysis
Watch the $380.00 level for a major technical reversal towards back towards the $400.00 level. However, the trend remains bearish now so selling rallies is still the play.
Also, trading inside the Ichimoku Cloud typically signals uncertainty, and technically trading inside the cloud is not usually a great idea, hence why we need to wait for a breakout from the cloud.
The larger picture for copper prices remains bearish because the red-metal is now testing back inside the Ichimoku cloud and the Lagging Line is still issuing a sell signal.
