Copper prices swung between gains and losses in today’s session and at the close were modestly higher, as the contract for March 2017 settlement on the COMEX division of the New York Mercantile Exchange closed the day at $2.6430 up 0.38%.
While copper prices failed to maintain near the highs of the day in today’s session, the ability of the contract to sustain Wednesday’s gain is a constructive sign. Also constructive is the fact that Wednesday’s rebound rally was accompanied by a 1.9% increase in open interest. This implies that new money entering the market drove the advance, a bullish sign.
Given the rise in open interest and the ability to sustain Wednesday’s recovery rally, the current target for copper prices is a return to the November highs near the $2.75 level.
Should the copper prices follow through to the upside and clear the November highs, the target would become the May 2015 rally peak at $2.9465, the next level of resistance on the weekly chart.
On a move to the downside, first support is at Wednesday’s $2.5505 low. Given that this low corresponds to a 61.8% retracement of the advance from the mid November low, a break below this level would increase the potential for a return to November low at the $2.4350 level.
This represents an important of level of support for the March contract, as a close below would confirm the formation of a double top reversal pattern, calling for lower copper prices in the weeks ahead. At present, the probabilities appear to favor a further move to the upside, rather than a return to the November low over the near term.