Copper Shows a Sign of Losing Upward Momentum

Is copper's outlook going to turn bearish?

Commodities 7

Copper futures slumped 4.9% yesterday, the largest drop since March, amid concerns about the pace of economic recovery. Currently, investors are still focusing on the signs of progress in the U.S. fiscal stimulus talks. 

U.S. House Speaker Nancy Pelosi said there are still major differences to be bridged in the negotiations over a fiscal stimulus package with Treasury Secretary Steven Mnuchin.

From a technical point of view, copper futures broke below the rising trend line drawn from March on a daily chart, indicating a bearish reversal signal. The RSI also suggests a bearish divergence signal, indicating the loss of upward momentum for the prices.

Bearish readers could set the nearest resistance level at $3.04. A break below the August's low at $2.77 would enhance the bearish outlook and trigger a drop to the next support level at $2.53 (A reaction low on June 16).

Source: GAIN Capital, TradingView

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