1. Price Action & Technical Analysis
Copper (HG=F) ended the 2026-09-23 session at 6.678, down 1.21% on the day, yet the metal remains up 5.17% over the trailing five days and 0.81% over the past 20 days. The daily close is below the pivot P of 6.807, with R1 at 6.869 and S1 at 6.702. The 5-day change of 5.17% reflects a sharp rally from the 2026-09-18 close of 6.615, which itself was up 0.43% on the day. The 20-day change of 0.81% indicates that the recent surge has only marginally lifted the medium-term trend, suggesting the market is still recovering from a deeper pullback. The ATR stands at 0.1315, implying an average daily true range of roughly 1.97% of the current price, which is elevated and consistent with the 20-day volatility of 24.97%. The 52-week drawdown is 13.49%, while the 20-day drawdown is 6.96%, highlighting that the recent rally has not fully repaired the longer-term damage.
On a weekly basis, the close of 6.678 is above the prior week's close of 6.615, but the intraweek high likely tested the pivot at 6.807. The 5-day change of 5.17% is the strongest weekly gain in the recent data set, yet the failure to hold above 6.807 suggests selling pressure at higher levels. The 20-day change of 0.81% is modest, indicating that the weekly gain is largely a rebound within a broader range.
However, the sharp 5-day rally followed by a 1.21% drop suggests RSI may have peaked and is now turning lower from overbought territory. The MACD, if computed, would likely show a bullish crossover that is now at risk of fading. The ATR of 0.1315 is a key metric for risk management; or about 3% of the current price. The pivot levels are the most actionable technicals: P=6.807, R1=6.869, S1=6.702. The close of 6.678 is below S1, which is a bearish signal for the next session. If the price fails to reclaim 6.702, the next support could be the 2026-09-18 close of 6.615. On the upside, a break above 6.807 would target 6.869. The 5-day change of 5.17% and 20-day change of 0.81% create a divergence: short-term momentum is strong, but medium-term momentum is weak. This often precedes a consolidation or pullback. The chPos (likely a measure of position within a range) was 76.5% on 2026-09-23, down from 93.4% on 2026-09-22 and 89.8% on 2026-09-21. This decline in chPos suggests the price is moving away from the top of its recent range, confirming the bearish daily close. The OI on 2026-09-23 was 175,200, up from 171,866 on 2026-09-22, indicating that the sell-off was accompanied by rising open interest, which is a bearish signal (new shorts entering). Volume on 2026-09-23 was 34, which is low compared to the 3,251 on 2026-09-20, but volume data may be incomplete. The 2026-09-20 volume spike of 3,251 coincided with a 1.66% gain, suggesting a buying climax. The subsequent lower volume on 2026-09-21 (41) and 2026-09-22 (45) with gains of 1.08% and 1.09% respectively, followed by a 1.21% drop on 2026-09-23 with volume 34, indicates weakening momentum. Overall, the technical picture is mixed: the 5-day rally is impressive, but the failure at the pivot and the drop below S1 suggest a near-term top. The ATR and volatility metrics indicate that sharp moves are possible. We would need to see a close above 6.807 to confirm a bullish continuation, while a close below 6.615 would confirm a bearish reversal.
2. Fundamental Drivers
Interest rates and the US dollar are the primary macro drivers for copper. The US 10-year Treasury yield (^TNX) is 5.114, up 3.04% on 2026-09-23, and the US Dollar Index (DXY) is 101.12, up 0.68%. Both are at elevated levels, which is typically headwind for copper. A rising yield increases the opportunity cost of holding non-yielding assets and can signal tighter financial conditions, while a stronger dollar makes copper more expensive for non-US buyers. The 3.04% jump in the 10-year yield is significant and likely contributed to the 1.21% drop in copper on 2026-09-23. The DXY at 101.12 is above the 100 level, which is a psychological threshold. If the dollar continues to strengthen, copper could face further pressure. However, the copper-gold ratio at 0.0016 is in the 92nd percentile of its 1-year range, meaning copper has been outperforming gold over the past year. This relative strength could be a sign of underlying physical tightness or a lag in gold's response to macro factors. The 3-year percentile is 47.62%, suggesting that over a longer horizon, the ratio is more neutral. This divergence between the 1-year and 3-year percentiles indicates that the recent copper strength may be a short-term phenomenon.
Inventories: SHFE warrant stocks fell to 19,088 MT on 2026-09-23, down 1,717 MT week-on-week, and down from 20,805 MT on 2026-09-22. This decline in SHFE inventories is bullish for copper, as it suggests strong demand or tight supply in China, the world's largest copper consumer. In contrast, LME warehouse stocks stood at 254,250 MT on 2026-09-22, down slightly from 255,875 MT on 2026-09-21. The LME decline of 1,625 MT is modest but still supportive. The combination of falling inventories on both exchanges is a bullish fundamental signal. However, the absolute level of LME stocks at 254,250 MT is still relatively high compared to historical norms, which may cap upside. The term structure is in contango: M1-M2 is -0.0385 (-0.57%), and the roll yield (RY) is -6.79%. Contango typically indicates ample near-term supply, which is bearish for spot prices but can be supportive for longer-dated contracts. The slope of 0.0353 suggests a mild contango. The contango is at odds with the falling inventories, which could be a sign that the inventory declines are not yet tight enough to flip the curve into backwardation. This is a key tension in the copper market.
We note that the VIX is at 15.18, up 2.08%, which is relatively low and suggests that broader market risk appetite is stable. However, the VIX is not a direct driver for copper. Geopolitics: The 48-hour news flow includes a fatal accident at BHP's Escondida mine, the world's largest copper mine. This could potentially disrupt supply, which is bullish for copper. However, the news is recent and the market's reaction may be muted if the disruption is limited. Glencore halting the Cerrejón coal railway after an attack is more relevant to coal, but it highlights geopolitical risks in mining regions. The news about higher Santa Cruz capital costs weighing on Ivanhoe Electric suggests that project economics are challenging, which could lead to supply constraints in the future. The AI-related news about CCL and copper foil demand from Morgan Stanley is a bullish long-term demand driver, as copper is essential for electronics and data centers. The broader base metals weakness, as noted in the SMM daily review, indicates that copper is not immune to the sector-wide sell-off. The rare earth news is not directly relevant to copper. Overall, the fundamental drivers are mixed: falling inventories and potential supply disruptions are bullish, while high yields, a strong dollar, and contango are bearish.
3. Positioning & Fund Flows
The CFTC COT data for copper shows that non-commercial net length was 65,106 contracts as of 2026-09-15, down 17,048 from the prior week. This is a significant reduction in bullish positioning. The long positions fell to 83,704 from 98,007, while short positions rose to 18,598 from 15,853. The netPct (net length as a percentage of open interest) is 22.49%, down from 27.62% the prior week. The crowding score is 63.36, down from 69.39, suggesting that the crowded long trade is unwinding. The CTA (Commodity Trading Advisor) positioning is at 98, which is unchanged and very high, indicating that trend-following funds are still heavily long. This is a risk: if the trend reverses, CTAs could be forced to liquidate, exacerbating downside. The hedge ratio is 58.27%, up from 56.46%, which may indicate that commercial hedgers are increasing short positions to lock in prices. The open interest in the COT report is 289,463, down from 297,491, suggesting some deleveraging. The OI in the daily futures data is 175,200 on 2026-09-23, which is a different measure (likely front-month) and not directly comparable. The reduction in net length and crowding is a healthy sign for the market as it reduces the risk of a sharp unwind. However, the CTA positioning at 98 is still a concern. The 20-day volatility of 24.97% is high, and the ATR of 0.1315 is elevated. The VaR95 of -2.97% suggests that there is a 5% chance of a daily loss exceeding 2.97% based on historical data. This is a significant risk for long positions. The Sharpe ratio (30-day) is 1.009, which is positive but not exceptional. Overall, positioning is less crowded than a week ago, but the high CTA exposure and elevated volatility warrant caution.
4. Cross-Asset Relative Value
The copper-gold ratio is 0.0016, which is in the 92nd percentile of its 1-year range and the 48th percentile of its 3-year range. This means that copper is expensive relative to gold over the past year, but fairly valued over three years. The 1-year percentile is very high, suggesting that either copper is overbought or gold is undervalued. Given the macro backdrop of high yields and a strong dollar, gold might be more attractive as a safe haven, which could lead to a mean reversion in the ratio. However, if the global economy is stronger than expected, copper could continue to outperform. The copper-gold ratio is a key cross-asset metric for copper traders because it reflects relative demand for industrial metals versus precious metals. A high ratio often precedes a correction in copper. The 3-year percentile of 47.62% suggests that the current ratio is not extreme in a longer context. The ratio is a useful tool for portfolio allocation, but it is not a timing indicator. The term structure contango and the high copper-gold ratio together suggest that the copper market is not as tight as the price action might imply. The contango indicates that near-term supply is adequate, while the high copper-gold ratio indicates that copper is priced for a strong economic outlook. If the economic data disappoints, copper could fall more than gold. The cross-asset relative value picture is therefore a cautionary signal for copper bulls.
5. Sentiment & News Monitor
The 48-hour headline bias is mixed but leans bearish. The fatal accident at BHP's Escondida mine is potentially bullish for supply, but the market may not have fully priced it in. The Glencore Cerrejón railway halt is more relevant to coal but adds to geopolitical risk. The SMM daily review notes that base metals were broadly lower, with zinc, alumina, polysilicon, and coking coal down over 1%, and lithium carbonate down over 3%. This suggests a risk-off sentiment in the metals complex. The news about rare earths and tungsten is not directly relevant to copper. The AI-related news about copper foil demand is a positive long-term story but unlikely to move the needle in the short term. The higher Santa Cruz capital costs for Ivanhoe Electric is a negative for future supply, which is bullish, but the immediate impact is limited. The sentiment is likely neutral to slightly bearish, given the price drop on 2026-09-23 and the broader base metals weakness. The VIX at 15.18 is low, indicating that broader market fear is not elevated. However, the copper-specific volatility is high. We would rate the sentiment as 4 out of 10 (bearish). The next 48 hours could see continued consolidation as the market digests the recent rally and the macro data.
6. Historical & Seasonal Patterns
We note that September is historically a mixed month for copper, with the end of the Chinese construction season and the start of the Northern Hemisphere autumn. The 5-day change of 5.17% is a strong move, and historically, such sharp rallies are often followed by pullbacks. The 20-day change of 0.81% suggests that the medium-term trend is not strongly bullish. The 52-week drawdown of 13.49% indicates that copper is still in a recovery phase from a significant decline. The 20-day drawdown of 6.96% shows that the recent pullback from the highs is moderate. We would need to see the 10-year seasonal pattern to make a more informed judgment. The lack of this data increases uncertainty.
7. Bull/Bear Scenario Analysis
Bull case (≥4 bullets):
- Falling inventories: SHFE warrants fell by 1,717 MT week-on-week to 19,088 MT, and LME stocks declined by 1,625 MT to 254,250 MT, indicating tightening physical supply.
- Supply disruptions: The fatal accident at BHP's Escondida mine could lead to production losses, and higher capital costs for Ivanhoe Electric's Santa Cruz project may deter future supply.
- Strong long-term demand: The AI-driven demand for copper foil and CCL, as highlighted by Morgan Stanley, could add significant incremental demand.
- Positioning reset: The reduction in net non-commercial length by 17,048 contracts and the drop in crowding score to 63.36 from 69.39 may have washed out weak longs, setting the stage for a sustainable rally.
Bear case (≥4 bullets):
- Macro headwinds: The US 10-year yield at 5.11% and DXY at 101.12 are both elevated and rising, which is negative for copper.
- Contango structure: The M1-M2 spread of -0.0385 and roll yield of -6.79% indicate ample near-term supply, which is bearish for spot prices.
- Technical breakdown: The close below the S1 pivot of 6.702 and the drop in chPos to 76.5% from 93.4% suggest near-term weakness.
- Crowded CTA positioning: The CTA score of 98 is extremely high, and any trend reversal could trigger a cascade of selling.
- High copper-gold ratio: The 1-year percentile of 91.67% suggests copper is expensive relative to gold, which could lead to mean reversion.
Near-term balance: The market is at a crossroads. The bullish fundamentals (falling inventories, supply risks) are offset by bearish macro and technicals. We expect a range-bound trade between 6.615 and 6.807 in the near term. A break below 6.615 would open the door to 6.5, while a break above 6.807 would target 6.869. Medium-term, the balance is slightly bearish due to the contango and high yields, but the supply disruptions could provide a floor. We would need to see a sustained break above 6.807 to turn bullish.
8. Trading Strategies & Risk Management
Strategy 1: Tactical Short
- Direction: SHORT
- Entry: 6.75 (near the pivot P of 6.807 and the 2026-09-22 close of 6.76)
- Stop: 6.87 (above R1 of 6.869)
- Target: 6.62 (near the 2026-09-18 close of 6.615)
- Timeframe: 1-5 days
- Conviction: 6/10
- Size: 1% risk per trade. With an entry at 6.75 and stop at 6.87, the risk is 0.12, or about 1.78% of the entry price. The target is 0.13 below entry, giving a risk-reward ratio of approximately 1.08:1. This is a low conviction trade due to the mixed signals. We would only take this if the price rallies to 6.75 and shows signs of rejection.
Strategy 2: Conditional Long on Breakout
- Direction: LONG
- Entry: 6.82 (above the pivot P of 6.807)
- Stop: 6.7 (below S1 of 6.702)
- Target: 6.95 (above R1 of 6.869)
- Timeframe: 1-5 days
- Conviction: 7/10
- Size: 1% risk per trade. Risk is 0.12, or about 1.76% of entry. Target is 0.13 above entry, risk-reward ratio of approximately 1.08:1. This trade requires a confirmed close above 6.807. If triggered, it could capture a momentum move. However, given the contango and macro headwinds, we would trail the stop aggressively.
The VaR95 of -2.97% suggests that daily losses can be significant. Position sizing should be conservative. We recommend risking no more than 1% of capital per trade. Monitor the 10-year yield and DXY for macro shifts. The CTA positioning at 98 is a risk; if the trend breaks, a sharp unwind could occur. We would avoid holding large positions through the SNB policy rate announcement on 2026-09-24 and the Chinese Manufacturing PMI on 2026-09-29.
9. This Week's Data Calendar
| Date | Time | Event | Importance |
|---|
| 2026-09-24 | 03:30 | SNB Monetary Policy Assessment | HIGH |
| 2026-09-24 | 03:30 | SNB Policy Rate | HIGH |
| 2026-09-24 | 04:00 | SNB Press Conference | HIGH |
| 2026-09-24 | 08:30 | CAD Core Retail Sales m/m | MEDIUM |
| 2026-09-24 | 08:30 | CAD Retail Sales m/m | MEDIUM |
| 2026-09-24 | 08:30 | USD Unemployment Claims | MEDIUM |
| 2026-09-24 | 09:00 | CNY CB Leading Index m/m | LOW |
| 2026-09-24 | 19:01 | CNY Bank Holiday | LOW |
| 2026-09-25 | 05:15 | GBP BOE Gov Bailey Speaks | HIGH |
| 2026-09-25 | 10:00 | USD Revised UoM Consumer Sentiment | MEDIUM |
| 2026-09-25 | 10:00 | USD Revised UoM Inflation Expectations | MEDIUM |
| 2026-09-27 | 21:30 | CNY Industrial Profits ytd/y | MEDIUM |
| 2026-09-29 | 21:30 | CNY Manufacturing PMI | HIGH |
The key events are the SNB policy rate and the Chinese Manufacturing PMI. The SNB is not a direct driver for copper, but it could affect the dollar and risk sentiment. The Chinese PMI is crucial for copper demand outlook. We will watch for any surprises.
This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute investment advice or a recommendation to trade.