Copper RSI Divergence Threatens Bullish BiasTechnicals
Prices hit fifteen-month highs this week, extending the recent rally. Copper is on the verge of another breakout, eyeing the January 2023 highs (4.356), which could open the door for further gain towards 4.579.
On the other hand, the Relative Strength Index (RSI) did not follow the price action and diverged lower on the H4 chart. This can lead to pullback, but the downside appears well-protected, starting with the EMA200 (at around 4.020). Daily closes below it are needed for the bullish momentum to pause, but that need strong catalyst.
Fundamentals
The improved supply-demand dynamics have fueled the rally and favor further upside. Optimism around China from recent data boost demand prospects midst the supportive green energy transition and the rebound of the chip industry that is largely fueled by the AI revolution. At the same time major mining companies have slashed their 2024 output outlook.
However, China’s recovery is bumpy and the critical property sector remains in distress. The US economy is performing very well, but along with sticky inflation and robust labor market, there is risk for fewer Fed rate cate cuts that could create headwinds.
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