- Copper wins nearly 3.0% on production cuts
- Overbought signals detected around key resistance
Copper futures (May delivery) surged to an almost one-year high of 4.04 on Wednesday after China’s biggest producers agreed on a rare supply cut amid raw material shortages.
Technically, the 61.8% Fibonacci retracement of the 2023 downtrend is currently under examination. A step above that border could lift the price instantly into the 4.12-4.17 zone, where the 78.6% Fibonacci mark is positioned. If upside pressures persist above 4.20, the next obstacle could pop up around the 2023 bar of 4.28.
The risk of a downside correction, however, is increasing as both the RSI and the stochastic oscillator are entering the overbought area, suggesting that today’s quick rally may not be sustainable.
Should the bears take over, the price might dive to retest the 50% Fibonacci mark of 3.93 and the ascending line from July 2022. If the 20-day simple moving average (SMA) gives way too, the next stop could be around the 38.2% Fibonacci of 3.83, while a drop below the 200-day SMA could clear the way towards the 23.6% Fibonacci of 3.71.
In brief, Copper futures are witnessing the fastest daily rally since July 2022. While a pullback cannot be ruled out, a close above 4.03 could delay any downside moves.
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