Copper price prediction: range-bound trading to persist

By: Faith Maina
Faith Maina
Faith strives to break down complex developments so investors can make better informed decisions. When Faith is not immersed… read more.
on Dec 30, 2021
  • copper price has been range-bound for two months.
  • It is finding support in the impoved risk sentiment.
  • The surge in the US dollar has curbed the metal's gains.

Copper price has remained within a two-month range. Earlier in the week, it hit a one-month high.

Underlying factors

On the one hand, copper price is finding support in improving risk appetite. Investors have continued to overlook the Omicron variant while focusing on the global recovery trade. For instance, earlier on Thursday, Dow Jones hit a new all-time high at $36,684. The improved sentiment has boosted riskier assets like equities and commodities.

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Nonetheless, a surge in the US dollar has curbed copper price’s gains. On Thursday, the dollar index edged higher as a reaction to the decline in weekly US jobless claims. For the week that ended on 25th December, unemployment insurance filings were at 198,000. The number was lower than the forecasted 205,000 and was close to its lowest level in over 50 years. The figures are an indication that the spread of the Omicron variant has not impacted employment.

In the new year, clean energy will be a key driver for copper price. The ongoing supply chain challenges will also support the red metal in the coming months. The US dollar movements will also an influential factor.

Copper price prediction

Copper price has been in the red for three consecutive sessions. At the beginning of the week, the red metal rose to the psychologically crucial level of 4.50 before pulling back. At the time of writing, it was down by 0.57% at 4.38.

On a daily chart, it is trading above the 25 and 50-day exponential moving averages. It is also above the long-term 200-day EMA.

In the short term, I expect copper price to trade within the horizontal channel whose formation began in late October. From this perspective, 4.50 will likely remain a crucial resistance zone for the metal. Subsequently, it may be range-bound with the point of convergence for the 25 and 50-day EMA, which is at 4.35, being a key support level to look out for.

Below the aforementioned support zone, it will probably drop slightly below the 200-day EMA at 4.19 before bouncing back. On the flip side, a move above the resistance level at 4.50 may push copper price to 4.60 before returning to the two-month-long range.

copper price
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