The price of copper has been holding the $400.00 support level despite the fears about dwindling global growth due to the new Delta variant of COVID-19, which could cause a slowdown in Chinese growth.
After a massively impressive first six months of the 2021, where copper hit a multi-year high, around $480.00, the red metal has gradually been edging lower, but not collapsing.
A combination of falling global demand, and better than expected output from key Latin American nations, which make up around two-fifths of global copper supply, has harmed copper prices.
Impressively, copper has been outperforming silver this week in terms of performance. The red metal has been unable to outperform the price of gold, although the fact that the $400.00 level still gives copper prices a realistic shot of recovering.
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 74 percent of traders are bearish towards copper. With the sentiment bias towards copper still at high levels, I believe a short-term recovery remains possible for the metal. Overall, we may see the price of copper starting to rally again.
Copper Short-term Technical Analysis
The four-hour time frame shows that a large head and shoulders pattern has formed, following the price of copper consolidating between the $440.00 and $420.00 levels.
According to the overall size of this typically bearish price pattern copper could be about to drop towards the $400.00 level. This could be a buying opportunity for copper bulls once the pattern reaches its full target.
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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.
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Since the price is still holding above neckline support, it could provide a signal that a recovery is on its way. According to the overall size of the bullish reversal pattern, copper prices could still hit the $600.00 level. Seeing as the pattern has not fully played out to the upside yet I think a dip-buying opportunity exists.
