Yesterday after the market close US President Trump announced US$200 billion of trade tariffs on China which initially sent copper futures and US equity futures tumbling. However, the drop was short lived with futures rebounding overnight and December copper futures are actually trading up 3.2% as I write these words:
Copper (4 Hour)
Monday evening low circled in green; the dip below US$2.60 was short lived and $2.60 can officially be declared to be strong support for copper.
Turning to the weekly chart we can see the importance of the $2.60 area including the 200-week moving average and a thick volume-by-price bar dating back to late 2016:
Copper (Weekly)
Judging by the longer term technical damage, today's copper bounce looks to be of the short covering variety after the much anticipated trade tariff news was announced. With that being said it does look like copper has formed a series of bullish divergences which are consistent with a long term bottom being put in place. There should be strong resistance up near $2.80 with $2.60 acting as a strong support until further notice.
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