- Copper futures plummeted on fears of a global economic slowdown, weighed down by the China PMI and other lockdowns in a city of 21.1 million.
- The negative divergence on the daily copper chart, coupled with the fundamental, sent prices below the 20 and 50 DMA.
copper futures are falling to two-month lows at $3.4165, shedding 3%, on fears that Chinese manufacturing activity will contract for the first time in three months, coupled with expectations of a US economic slowdown triggered by the adjustment of monetary policy conditions by the US Federal Reserve.
Furthermore, the broad-based strength of the US dollar, coupled with the news that the Chinese city of Chengdu announced a lockdown of its 21.2 million residents, is a headwind for the red metal.
Copper Price Analysis: Technical Outlook
Copper’s daily chart shows a neutral bias to the downside. It is worth noting that the last copper article I wrote noted that “the Relative Strength Index (RSI) posted a successive series of lower highs, against the price action, meaning that prices are about to go down.” Since then, copper has dipped below the 20 and 50 day EMAs from $3.6970 to $3.4105.
If copper makes a daily close below the Aug 4 daily low of $3.4160, it could send the red metal towards the Jul 21 swing low of $3.2505 followed by the yearly low at $3.1315. On the other hand, if copper buyers retake the 50-day EMA at $3.6340, the 20-day EMA at $3.6175 could be retested.
Source: Fx Street
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