Copper – Downtrend Continuation or Correction?

A strong rally in copper this afternoon has seen it push up towards 2.06 to test what may be a notable resistance level.

Not only does 2.06 mark the top of the ascending channel that copper has traded within since rebounding off its lows on 15 January, it is also a prior level of support – most recently on 4 January – and the 61.8% retracement of the move from 31 December highs to 15 January lows.

Copper Daily

This alone obviously doesn’t mean we’ll see a reversal at this level but it doesn’t highlight it as being a possible level of interest for those looking to sell into rallies.

As of yet, price action has given no indication that we are going to see a reversal off this level but should that appear, it may point to a continuation of the downtrend.

A break above this level on the other hand may suggest that we’re going to see a broader correction in Copper, with 2.138 being the next notable resistance level. A break above here would also bring an end to the period of lower highs, which again could point to a broader correction.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.