Copper price rose on fundamentals, but it can reverse from technical resistance

04 May 2023 153
Copper price rose on fundamentals, but it can reverse from technical resistance

The copper price rose amid a possible pause in rate hikes by the U.S. Fed.


On Thursday, copper rebounded from a low level that was formed in April. Assumptions related to the possible pause in interest rate hikes by the U.S. Federal Reserve System (Fed) increased the demand for risky assets. This provided support to metal prices.


According to the U.S. Fed Chairman Jerome Powell suggestions, yesterday's interest rate hike may be the last in the current cycle. However, he did not say that fight against the inflation is over. 


The news from the other side of the world also influenced on copper pricing in some ways.


In March, China increased imports of copper scrap by 2.2% compared to February and by 18.43% compared to March last year. Scrap purchases on the world market increased by 3,800 tons and reached 177,600 tons. At that time, companies were still optimistic about the forecast before the peak season of demand for red metal.


However, copper consumption is still recovering slowly, especially in the construction sector. This makes the demand for imported copper scrap weaker and could show a negative trend in the coming months.


Probably, the situation on the copper scrap market in China will remain stressed. Expanding stimulus to accelerate the growth of the real estate sector could increase copper consumption. But weak macroeconomic background and low demand in May can still put pressure on copper quotes. 


Considering that final consumption of copper is recovering slowly, especially in the construction sector, this could put pressure on the price of the red metal.


The copper price bounced from the key support of 8430 under the influence of fundamental factors. Today at the market opening the price was near the descending resistance of the one-hour timeframe. Stochastic Oscillator indicators (standard values) are approaching the overbought zone, indicating the possibility of a reversal from the resistance line soon.



The short-term prospects for copper are to sell

The target is at the level of 8430.

Part of the profit should be fixed near the level of 8495.

The stop-loss is at the level of 8610.

"Bearish" trend has a short-term character, so the volume of trade should not exceed 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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