The price of copper has been staging an impressive recovery this week and is holding its correlation with other precious metals. The breakout is due to improved market sentiment towards the global economy.
Traditionally, the copper market is seen as a bellwether for economic growth because of the metal’s central role in construction, wiring and electronic goods. Copper could be rallying as sentiment towards stocks picks up.
With blue-chip stocks and mining stocks rallying it is good news for Copper. This week’s earnings from the US economy have been good, so more positive results are good for precious metals with every day and electrical uses.
Inflation is another big reason why copper price appreciation is happening this has been a common theme since 2021. Today’s CPI inflation report could be significant in determining whether the breakout is genuine.
Technical analysis is pointing towards the $500.00 level as a possible price target if the breakout above $445.00 takes hold. This is something that I have been expecting to happen for some time as Copper has looked well bid above the $430.00 to $445.00 range.
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 slightly, which suggests more gains are indeed possible.
According to the ActivTrader platform some 62 percent of traders are bearish towards Copper. With the current moderate sentiment bias towards copper, I believe more gains in the red metal remains the most likely scenario.
Copper Short-term Technical Analysis
The four-hour time frame shows that copper is creating bullish higher highs and lower lows in short-term and has clearer all forms of near-term technical resistance.
It is also noteworthy that the $500.00 resistance level is a big psychological barrier that needs to be broken to accelerate the breakout momentum in the red metal.
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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.
I am encouraged by the fact that a large inverted head and shoulders pattern with $40.00 of upside potential has been activated. A break above the $460.00 is pointing to a price ramp towards the $500.00 level.
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