September Comex High Grade Copper futures closed near a two-week low on Friday, pressured by a strong dollar, but underpinned by the threat of strikes at mines in Chile.
Rallies are expected to remain short-lived as long as rising U.S. Treasury yields are supportive for the U.S. Dollar and supply remains ample. Investors are not likely to chase prices higher until there is evidence that supply is tightening significantly.
Early Monday, investors will be eyeing reports from China on consumer inflation and producer inflation. The CPI is expected to come in slightly higher at 1.6% and the PPI is expected to remain at 5.5%. Stronger numbers may underpin the copper market, at least temporarily.
Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has been trending lower since June 30. A trade through $2.7185 will change the main trend to up.
The main retracement zone is $2.6675 to $2.7105. The last three closes have been below this zone, giving the market a downside bias.
The main range is $2.5490 to $2.7185. Its retracement zone at $2.6340 to $2.6135 is the primary downside target. An uptrending angle passes through this zone at $2.6290, making it a valid target also. Since the main trend is up, buyers may come in on a test of this zone.
Forecast
Based on Friday’s close at $2.6470, the market can move in either direction.
A bearish CPI report from China and a stronger dollar could drive copper into the support zone at $2.6340, $2.6290 and $2.6135.
A bullish CPI report could trigger a rally into $2.6675, followed by $2.6685.
The Chinese inflation data is due to be released at 130 GMT.
This article was originally posted on FX Empire