September High Grade Copper futures posted an inside move. This was expected because of Monday’s expanded session. Volume was down as many traders chose to stand on the sidelines ahead of Wednesday’s shortened trading session and Thursday’s U.S. market holiday.
Oversold conditions and position squaring ahead of Friday’s U.S. Non-Farm Payrolls report may have been the reasons for Monday’s expanded range day. Uncertainty over whether the Fed is poised to begin reducing its asset purchasing program continues to make investors nervous. Traders want to know dates, but the Fed remains ambiguous as to its future plans.
Without the Fed’s guidance, the copper market is likely to remain range bound over the near-term. Things could open up on Friday if the U.S. jobs data report misses the mark. Analysts are looking for an increase of 165,000 jobs.
A number lower than this will indicate the economy is still sluggish, this is likely to mean the Fed will refrain from making any changes to the size of its stimulus. A number greater than 165,000 is likely to encourage the Fed to take action as early as September.
Technically, the main trend is up, but the market is in a position to rally further. The main trend turns up when 3.4125. is violated. The current chart pattern suggests that 3.1990 is a potential target. On the downside, support comes in 3.0855.