Copper appeared set for a pullback heading into today’s session, given yesterday’s setback and the current extreme overbought condition impacting the market. However, copper prices instead moved sharply higher today, with the contract for December settlement closing at $2.195, up 1.8%. The ability to move higher in the presence of an overbought condition is a sign of strength.

The move occurred amid strong volume, also a constructive sign. An increase in open interest reported for today’s advance would be another bullish indication, suggesting a further move higher is likely. Open interest has been on the decline in recent sessions. Specifically, from September 13th through Tuesday’s close, the number of outstanding contracts has declined about 6.5%.

This implies short-covering has played a role in lifting copper prices.

Source: Economiccalender.com