Technical Analysis – Copper futures gain downside momentum below MAs

Copper futures are steadily plotting lower highs and lows beneath the simple moving averages (SMAs), whose bearish demeanours are underpinning the negative price action. The falling Ichimoku lines are signalling that downside momentum is gaining pace, while the short-term oscillators are suggesting that negative pressures are taking a breather.

The MACD, far below zero, has flattened underneath its red trigger line, while the RSI is hovering marginally above the 30 level. The recently acquired positive charge in the stochastic oscillator has yet to abate, indicating that current buyers are doing well to counter downside driving forces.

If the price adheres to the current trajectory, early support could develop from the 4.130-4.158 nearby zone. If the commodity’s price continues its downfall, it may then target the vital lows from the first half of April, that being 4.030 and 4.000 respectively, which are surrounding a key support barrier at 4.014. This level happens to be the 261.8% Fibonacci extension of the up leg from 4.440 until 4.702. Failing to terminate the drop, the price may shoot to challenge the 3.939 trough.

The upside picture seems like a tough endeavour for buyers with initial friction possibly arising from the 4.249-4.270 resistance band. Breaching this, the price could then meet the 4.343 nearby high. From here, buying interest would need to strengthen considerably for the price to overcome the resistance section of 4.400-4.440, which also encapsulates the 50-period SMA.

Summarizing, should copper’s decline halt around the 261.8% Fibo extension, basically the 4.000 round number, this move would have been a deep correction in a broader bullish bias. However, extending past the April 1 trough of 3.939, downside risks could gain a significant upper hand.

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