Copper Higher on Demand, 200 EMA Resistance

by on November 29, 2013 6:05 pm GMT

Copper futures rose on a positive outlook for increasing demand in China. Chinese manufacturing indicators continue to show growth expansion, and copper stockpiles shrank for the twelfth week in a row, according to data from the London Metal Exchange.

TD Securities’ head of commodity strategy Bart Melek said “we continued to see Chinese demand move higher and tighten up the markets.”

Copper has seen resistance at the 200 EMA on the 4H chart. Price action has routinely pierced the moving average resistance, but it has yet to close above it since November 1.

The industrious metal has bounced well off the $3.124 low made on November 18, but price has been contained over the last couple sessions. Price action is forming into a symmetrical triangle, and a move to either side could happen.

The 4H RSI and +DMI are beginning to slope down as momentum fades, and price action rests on the 20 EMA. A downside move to $3.1936 will put price at trend line support. If broken, copper could trade lower to $3.1796 to $3.1682.

Price could trade upwards on speculation of demand. A close above the trend line resistance will be positive bulls, but a close above the 200 EMA is needed for more upside.

Upside potential at $3.2406 is seen upon a broken 200 EMA close. Look for continuing signs of Chinese growth for momentum trades. The Chinese Purchasing Manager’s Index is due out on December 1.

A spike target of $3.26 is seen as China signals growth expansion.

4H Chart of HG

4H Chart of HG