March Comex High Grade Copper futures are trading slightly higher shortly before the regular session opening. Volume and volatility could be light early in the session ahead of the Fed’s policy announcement and widely expected 25-basis point rate hike at 1900 GMT.
The Fed’s monetary policy statement and interest rate forecast could move the U.S. Dollar and this will have a direct impact on the dollar-denominated copper market. A stronger dollar tends to hurt demand for copper. A weaker dollar could be supportive for copper prices.
Technical Analysis
The main trend is up according to the daily swing chart. A trade through $2.5505 will turn the main trend to down. This is followed by the next main bottom at $2.4350.
A trade through $2.7130 will signal a resumption of the uptrend. This is followed by the November 28 main top at $2.7530. This is the trigger point for a strong rally.
The short-term range is $2.7530 to $2.5505. Its retracement zone at $2.6520 to $2.6755 is resistance.
The intermediate range is $2.4350 to $2.7530. Its retracement zone at $2.5940 to $2.5565 is currently being tested as support. It held before when the market bottomed at $2.5505 on November 30. If it fails, the break could extend into the major 50% level at $2.4250 over the near-term.
Forecast
Based on the current price at $2.6075 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the 50% level at $2.5940.
A sustained move over this level could drive the market into a Gann angle price cluster at $2.6350 to $2.6550. This is followed by $2.6520 to $2.6755 then $2.6930. Additional resistance is $2.7130 and $2.7230. The latter is the last potential support angle before the $2.7530 main top. Needless to say, we could see a labored rally because of all the potential resistance levels.
On the downside, a sustained move under $2.5940 will signal the presence of sellers. This is followed by $2.5565 then $2.5505. The trend will change to down under $2.5505 with the next target $2.5350. This is the trigger point for an acceleration into a major uptrending angle at $2.4770.
Watch the price action and read the order flow at $2.5940 today. Trader reaction to this level will set the tone for the day. Look for volatility at 1900 GMT with the release of the Fed data.
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