Copper False Break
After breaking out above the 3.7300 level for the first time since June earlier this month, Copper prices have since reversed back below the level and are now sitting back within the 3.4445 – 3.7300 range which has framed price action over much of the last six months. The big driver behind the reversal lower has been the shift in optimism around China reopening story.
Shifting China View
Copper futures were seen rallying in response to growing speculation that China was on the path to abandoning its zero covid policy and reopening the economy. However, over the last week this story has totally changed with news of fresh lockdowns announced in China amidst record covid cases and fresh covid deaths. With traders now fearful of further such lockdowns over the coming months, the demand outlook for copper has been materially impacted.
Lockdowns Key For Copper
Looking ahead, copper traders will be keeping a close eye on covid headlines coming out of China. If the initial 5-day lockdown announced in Zhengzhou province ends as signalled, copper prices should bounce back. However, if the lockdown is extended, this will be heavily bearish for price near-term.
Technical Views
Copper
The reversal back under the 3.7300 level has stalled for now with price attempting to push back above the level. Momentum studies remain mixed here, signalling plenty of two way risk. If bulls can get back above the 3.7300 the focus will then turn back to the next upside objective at 4.1185. While below 3.7300, however, the 3.3445 level is the next support to note.