Metals under pressure but finding technical support. Copper set for bounce
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Gold XAUUSD broke above the strong resistance at around $/oz 1.834 with ease but ran out of steam before reaching next strong resistance at around $/oz 1.910. $/oz 1.875 sellers took control hammering the precious metal down $ 100 in three days.
Is seems finding some support here around the 55 and 200 SMA’s and the short term rising trend line?
Silver XAGUSD only had a few days above $/oz 25 testing the 200 Simple Moving Average. Similar to Gold Silver got hit by heavy selling and is now testing support at around $/oz 23.15, neckline of the S-H-S pattern. A close below could spur another sell-off down to around 21.45 i.e. bottom of the inverted head.
Platinum reached it potential price target after the Inverted Shoulder-Head-Shoulder pattern confirmation. Mood changed quickly though after being rejected at the 200 SMA a heavy selling hit the precious metal. Straight through minor support at around $/oz 1000. Some support at around the falling neckline of the S-H-S pattern which currently coincide with $950. However, with RSI now recorded a close below 40 threshold i.e. in bearish sentiment there is great risk of Platinum to test strong support at around $/oz 900.
Palladium could be range bound between $/oz 1.827 and 2.205 likely testing the lower support within a few days. No clear direction before breaking out of the fairly wide range. If Palladium breaks its support there isn’t any real support before at around $1.732.
Copper. After being rejected at the strong resistance at around $/lbs 482.50 Copper experienced a sell-off down to test the falling trend line in the triangle pattern it broke out of. The Commodity has tested it a few times sellers trying to push it back below the trend line, unsuccessful it might seem.
If it closes above $450 we are likely to see a new retest of the resistance level.
If Bears can push it back down below the trend line and close below $ 420 it could trigger a sell-off towards $ 400.
RSI is still bullish and with no divergence indicating the likely scenario is a bullish one.
After the bubble implosion and total collapse in the Iron Ore price it seems to have found solid ground around $90. On the weekly chart we can see the metal is essentially back to upper level in the “range bound base” it was trading in before market participants entered a buying frenzy last year.
The past two weeks of trading indicates sellers have run out of power and a minor bounce towards the 200 weekly SMA at around $107 is not unlikely. A close above could extend the bounce to $125-130.
RSI Divergence explained: When an indicator such as RSI is displaying lower peaks while the underlying price is still making new highs. It is a sign of imbalance in the market, the strength of the trend is weakening. It could be an indicating of an ending of a trend. However, imbalances in financial markets can go on for quite some time. To cancel Divergence out RSI must either 1. Make a new high simultaneously with the price or 2. Close below 40 threshold.
Same can be observed in bear market just here market makes a new low but Indicator doesn’t.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.