Copper rallied as economic data came in stronger over the course of last week. Core PCE continued to show a decline in inflation, albeit the decline is slowing. October flash PMIs were good with the flash manufacturing PMI moving above 50, signalling expansion and the flash services PMI remaining above 50. Q3 GDP came in hotter-than-expected at 4.9% vs 4.5% with Core Durable Goods also showing strength.
The daily chart (left) shows copper trading in its bullish channel between the upper blue and red bands. The daily RSI has also moved to the bullish side of 50. The longer it maintains above the 50, the more momentum support the base metal will have.
The hourly chart on the right also has some bullish indications. The green 5-hour EMA is looking to cross above the orange 10-hour EMA (red ellipse). If successful, this will put the EMAs, trend-following indicators, into a bullish formation. The stochastic has already crossed positive (black ellipse). If this momentum-based indicator moves towards 80 and holds, there will be an underlying bullish momentum supporting hourly prices.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.