Introduction

Copper has been one of the standout commodities of 2025, surging by 25% year-to-date, nearing record highs. The industrial metal is a key indicator of global economic health, and its price movement reflects underlying macroeconomic trends. With China’s infrastructure demand booming and supply constraints tightening the market, copper’s bullish momentum appears strong. However, with RSI nearing overbought levels and potential headwinds from economic uncertainties, is there still room for copper to climb higher, or are we approaching a pullback?

Fundamental Analysis

1. Supply Constraints Driving Prices Higher

Copper’s bullish rally is largely attributed to supply disruptions in key mining regions, particularly in Chile and Peru, which together account for nearly 40% of global production. Mining output has been impacted by labour strikes, weather disruptions, and declining ore grades, reducing supply at a time when demand remains strong.

2. Strong Demand from China’s Infrastructure Boom

China, the world’s largest consumer of copper, continues to drive demand through massive government-led infrastructure projects and a focus on green energy development. Increased investments in electric vehicles (EVs), renewable energy, and high-speed rail have boosted copper consumption, further supporting higher prices.

3. Potential Headwinds: Global Growth Concerns & Trade Policy Risks

Despite the bullish sentiment, there are growing concerns about global economic slowdowns, particularly in Europe and the U.S., which could impact industrial demand for copper. Additionally, recent discussions on U.S. trade tariffs could disrupt global trade flows, potentially affecting copper’s demand outlook.

Technical Analysis

A daily chart of copper confirms the strong bullish trend, but also highlights potential risks of a near-term pullback.

1. Ichimoku Cloud: Strong Bullish Momentum

• Copper is trading above the Ichimoku Cloud, confirming an ongoing uptrend.
• The Conversion Line (4.7783) is above the Base Line (4.7193), reinforcing short-term bullish momentum.
• The Lagging Span (Chikou Span) is above price action, confirming a strong trend.

2. RSI Nearing Overbought Territory

• RSI is currently at 68.79, approaching the overbought threshold of 70.
• This suggests copper remains in strong momentum, but traders should watch for potential exhaustion.

3. MACD: Bullish but Caution Needed

• MACD Line (0.1218) is above the Signal Line (0.0957), confirming continued bullish momentum.
• However, if the MACD histogram begins to decline, it could signal waning momentum.

4. Key Price Levels to Watch

• Resistance: $5.00 (psychological level), $5.20 (next major target)
• Support: $4.75 (short-term support), $4.54 (Ichimoku Cloud base and key support zone)

Sentiment Analysis

Market sentiment remains largely bullish, with institutional investors and hedge funds increasing their copper exposure due to supply concerns. However, some analysts are cautious about a potential correction, especially if China’s demand slows or global growth weakens.

Conclusion

Copper’s bullish rally remains intact, backed by supply constraints, strong demand from China, and a supportive technical setup. However, with RSI nearing overbought levels and economic risks looming, traders should be mindful of a potential pullback. As long as copper holds above $4.75, the bullish trend remains intact, with a target of $5.20 in the near term. A break below $4.75 would indicate a shift in momentum.

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