Copper retreats from three-day high after China data

Comex Copper backed-off from the three-day high of $2.8865 to $8769 after the official China manufacturing PMI for July missed estimates. 

The metal clocked a two-year high of 2.8919 last week on news of Chinese restrictions on scrap imports that would increase demand for imported refined copper.

The overbought technical conditions as highlighted by the 14-day RSI capped further gains. China official manufacturing Purchasing Managers' Index for the month of July came in at 51.4 vs. 51.6 expected. A weaker-than-expected China PMI weighed over the metal. China accounts for almost half of global copper consumption estimated at 23 million tonnes this year.

Copper Technicals

The weekly chart shows inverse head and shoulder breakout (bullish reversal pattern) which suggests the sell-off from the 2011 high has ended. 

A break above $2.8919 (previous week’s high) would expose $2.9183 (March 2014 low) and $2.966 (May 2015 high). On the downside, breach of support at $2.8655 (session low) could yield $2.8158 (Feb 2017 high) and $2.7765 (inverse head and shoulder neckline support).