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Copper Price Action – Expect Sharp momentum moves in coming days

Trading copper was quite challenging in recent sessions, especially finding short-term trading setups on lower time frame. Price action was completely hectic because of constant price gaps and less liquidity. Take a look at the daily chart of Copper

Copper Price action can cause sharp momentum moves in coming days

We could see the same Market structure since Sep 2017; many traders would look at the chart in hindsight and consider it a trend! But it’s a directional Range, which is more suitable for mean reversion or Range trading. The swings on both sides are evidential activity of Buying and selling pressure. Both bulls and bears are fighting it out to determine control over price behavior and Market sentiment.

From Feb 2018 onwards, Price action become even more volatile, unstable because of Chinese Holidays and decline in Chinese market participation rate (because of Chinese New year). It’s a well-known fact that Chinese are the major players in Copper market; they’re responsible for nearly 2/3 of the trading volumes! Decline in liquidity (due to declined Chinese trading volume) is the major reason for the whipsaw and unwanted price gaps.

But the conditions are likely to change in coming days. Reopening of Chinese markets and pick up in trading volume can cause sharp momentum moves in copper, so traders should be prepared for it. Keep an eye on the 4h and Daily chart for potential momentum trading setups.

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