- Copper price looks to retest eight-year highs amid economic optimism.
- Falling wedge breakout on the hourly chart points to more gains.
- 21-HMA, bullish RSI offer support to the red metal.
The price of copper (futures on Comex) consolidates its vertical rise to eight-year highs of $3.7952 reached Wednesday, as the bulls take a breather before the next leg higher.
Copper, a global economic bellwether, rallied hard this week on expectations of the passage of a $1.9 trillion US stimulus package in Congress, which boosted hopes for swifter economic recovery.
Further, the Chinese factory gate prices returning to the positive territory combined with the pre-Lunar New Year holiday stockpiling also supported the surge in the industrial metal. Note that China is the world’s top copper consumer.
PRICE OF COPPER: HOURLY CHART
From a short-term technical perspective, the red metal is set to retest the multi-year tops above $3.7950, on the verge of registering the longest rally on record.
Copper bulls have taken out the falling wedge hurdle at $3.7636, confirming a bullish breakout, which opens doors towards $3.80.
The price has recaptured the 21-hourly moving average (HMA) at $3.7692, looking for a strong catalyst for the next push northwards.
To the downside, immediate support is seen at the pattern resistance now support at $3.7550. The next relevant cushion awaits at the bullish 50-HMA of $3.7501.
The pattern support at $3.7473 is the line of resort for the copper bulls.
To conclude, the path of least resistance appears north, backed by the bullish relative strength index (RSI), holding firmer at 56.69.
Last news about copper
The non-ferrous metal was last seen trading at $3.7717, almost unchanged on the day. The sentiment around the price of copper remains buoyed by the optimism surrounding the first Biden-Xi phone call.
Both the leaders discussed various points of contention but overall the talks reflected goodwill and mutual respect between the world’s two biggest economies, which lifted the market mood.
Looking ahead, the US weekly jobless claims and stimulus updates will be closely eyed for fresh cues on the risk trends, which could likely have a significant impact on the metal.