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• Copper futures rebounded above $3.7 per pound, driven by disappointing economic data in China.
• The slower expansion of China’s manufacturing sector in June led to expectations of economic stimulus measures.
• Declining employment levels and weakening business sentiment contributed to the sluggish output and new order growth rates.
• Copper inventories across major exchanges declined by 55% since March, indicating a tighter market.
• Current stockpile levels represent only three days of global copper consumption in 2022.
• Expectations of volatility in copper prices influenced by the US dollar’s value and investor sentiment towards China’s manufacturing and construction sectors.

The macro perspective of the Copper Futures contract trades within a long-term balanced price range. The market encountered core selling around the upper extreme in the prior year, leading to a close inside the bracket and a potential target of the swing lows from the previous year. The outcome is heavily influenced by the current monetary policy and its hawkish stance.

Zooming in on the quarterly perspective, we observe a slightly bearish trend as the market closed approximately 8% lower. However, there are indications of a potential bullish behavior and the establishment of a balanced price range, which could lead to rotational scenarios in the upcoming quarters. Traders might target the swing highs for absorption purposes, although the auction development on lower periodicities will play a significant role.

In the monthly interval, there are slightly bullish nuances suggesting a potential target of the mentioned swing highs for absorption purposes. On the other hand, sellers might focus on the lower extreme to establish a balanced price range within this interval.

Turning to the weekly interval, the market displays micro-balanced behavior, prompting traders to lean on the extremes to conclude rotational scenarios. Both extremes are likely to be targeted in order to achieve this balance.

Examining the daily interval, we find that the market trades below the year’s developing value area. Absorption behavior to the upside suggests a potential return to the value area, targeting the VWAP and swing highs. However, sellers might show interest in the lower extreme (DVAL) due to the current short-term rotational behavior resulting from the US holiday, Independence Day, which leads to lower volatility and thin volume. It is worth noting that the market still trades within the value close area of the previous year, indicating an extreme-to-extreme scenario.

2 Weeks Ago

Analyzing the COT reports, we notice a slight decrease in the increase of net positions. Money managers appear to have closed portions of their long core positions and opened new short positions.

Lastly, the recent decline in the dollar is a supportive factor for Copper’s potential upward movement. However, as a new quarter and month begin, mixed signs suggest a balanced approach in the current moment.

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