Copper (HG) Price Forecast: Potential Decline to $5.39 Support
Muhammad Faraz 
Copper (HG) Price Forecast Potential Decline to $5.39 Support
Copper’s price
Current Market Structure and Price Action
The current market structure has turned bearish, with the price establishing a clear lower high near $6.30 in October and now breaking below the significant $6.00 swing low. The price is currently trading below all major daily moving averages (50, 100, 200-day), which are now acting as dynamic resistance. Recent price action on the 4-hour chart shows consistent closes below $6.00 with occasional retests that get rejected, indicating seller dominance. This compression suggests the next leg down is imminent.
Identification of the Key Resistance Zone
The most critical technical element is the new Strong Resistance Zone between $5.95 and $6.05. The strength of this zone is derived from:
- Historical Significance: This was the previous major support area throughout September and early October. The principle of “support turns into resistance” is now in play.
- Technical Confluence: The zone aligns with the psychological $6.00 level and the 50-period Simple Moving Average on the 4-hour chart, adding layers of significance.
- Market Psychology: The failure to hold $6.00 is a significant bearish signal that likely triggered stop-losses and attracts new short positions on any pullback to this area.
This confluence makes it a high-probability level for bearish reactions on any retest.
Technical Targets and Rationale
Our analysis identifies the following price targets:
Intermediate Target (IT): $5.65
This is a 1:1 measured move target calculated from the height of the recent distribution range/head and shoulders pattern projected downward from the $6.00 neckline break. It also aligns with a minor consolidation zone from July.
Primary Target (PT1): $5.39
This is the primary technical target, representing the major swing low from May 2024. This level served as a launchpad for the previous rally and is expected to act as a strong magnet and potential support area in a bearish trend.
Prediction: We forecast that the price will continue its descent, first testing the $5.65 intermediate target. A sustained breakdown below that level would then open the path towards our primary target at $5.39.
Risk Management Considerations
A professional strategy is defined by its risk management.
- Invalidation Level (Stop-Loss): The entire bearish thesis is invalidated if the price achieves a daily close above $6.15. This level is above the key former support/resistance zone and would indicate a false breakdown, potentially trapping shorts and triggering a squeeze back into the prior range.
- Position Sizing: Any short positions or bearish spreads considered should be sized so that a loss triggered at the invalidation level represents a small, pre-defined percentage of your total trading capital (typically 1-2%).
Fundamental Backdrop
The technical setup is framed by the current fundamental landscape:
- Demand Concerns: Fears of a global economic slowdown, particularly in China’s property sector, a major copper consumer, are weighing heavily on demand outlook.
- Dollar Strength: A robust U.S. Dollar, driven by higher-for-longer interest rate expectations, pressures dollar-priced commodities like copper.
- Inventory Builds: Rising visible inventories in LME and SHFE warehouses are providing tangible evidence of softening immediate demand against steady supply.
These factors collectively contribute to the bearish sentiment surrounding copper, reinforcing the technical outlook for lower prices.
Conclusion
Copper is in a confirmed bearish phase following the critical breakdown of $6.00. The weight of evidence suggests further downside, initially targeting $5.65 and ultimately $5.39. Traders should view any retest of the $5.95-$6.05 resistance zone as a potential opportunity to add to or initiate bearish positions, while managing risk diligently by respecting the key invalidation level at $6.15. The reaction at the $5.39 target will be critical for determining the market’s next major directional bias.
Chart Source: TradingView
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. All trading and investing involves significant risk, including the possible loss of your entire investment. Always conduct your own research (DYOR) and consider seeking advice from an independent financial professional before making any trading decisions.
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