Copper future contract for delivery hit 3 ½ year high at $3.2980 in extension of two-week uninterrupted rally from $2.9425 trough.
Metal rallied to new high on Tuesday after post-holiday trading started with gap-higher opening, with strong support coming from expectations of stronger demand from China – metal’s top consumer.
The price was slightly lower on Wednesday, but dips were so far limited, despite reversal signals developing on overbought daily studies.
However, corrective action should be anticipated in coming session as daily RSI and slow stochastic are turning south in overbought territory.
Near-term action was so far contained by rising hourly cloud (spanned between $3.2620 and $3.2397) with limited downside risk seen while the cloud holds dips.
Sustained break lower is needed to confirm correction, which should be ideally contained by supports at $3.1760 (10SMA) and $3.1622 (Fibo 38.2% of $2.9425/$3.2980 ascend) to keep bullish structure intact for extension and close above $3.2930 (14 July 2014 peak) which would signal further advance.
The price is currently riding on the third wave of five-wave sequence from $1.9360 (15 Jan 2015 low) which could extend to its 100% Fibonacci expansion at $3.3600.
Conversely, deeper pullback towards $3.1200 zone (daily cloud top) could be expected on firm break below $3.1622 pivotal support.
Res: 3.2980; 3.3050; 3.3325; 3.3600
Sup: 3.2620; 3.2475; 3.2141; 3.1760