Copper price edged lower on Thursday after the bulls lacked enough momentum to hit the critical level of $3.75 per pound on Tuesday. The bears remain in control despite the tight supplies.
On the one hand, tight supplies have continued to support copper price. Indeed, this bullish driver has traders forecasting that it may have found its short term bottom at July’s low of $3.13. There has been a persistent decline in inventories in Chinese and LME-bounded warehouses.
Nonetheless, a strong US dollar and concerns over the global economic growth have continued to weigh on copper price. In particular, a strong US dollar has placed the red metal in the hands of the bears ahead of the expected super-sized interest rate hike by the Federal Reserve. A look at the fundamental and technical indicators points to the continuation of a bearish trend . In particular, the commodity may be range-bound in the ensuing sessions.
Copper price prediction
COMEX copper futures was in the red for the third session in a row after rebounding to a two-week high of 3.69 on Tuesday. As shown on its daily chart, the red metal is trading below the 25 and 50-day exponential moving averages; pointing to further losses in the ensuing sessions.
Prior to 23rd June, copper price had been trading below the critical level of 3.75 since the beginning of February 2021. However, concerns over the global economic growth and a strong US dollar pushed it to 3.13 in July; its lowest level since November 2020.
Granted, it may have found its short term bottom amid tight supplies. Nonetheless, efforts by the bulls to push copper price past the crucial support-turn-resistance level of 3.75 in late August were unsuccessful. Similarly, a pullback in the US dollar did not yield enough bullish momentum to boost it to the aforementioned level on Tuesday.
As shown through the trendlines highlighted in red, the formation of a triangle pattern points to the continuation of the bearish trend. In fact, the pattern’s apex is at the base of the 25-day EMA at 3.52. In the ensuing sessions, this will be a level worth watching.
With the Fed policy meeting in the horizon, copper price will likely continue to face resistance at 3.69 in the short term. On the lower side, it may find support at 3.37. However, a move above 3.75 will invalidate this bearish thesis.