US copper futures rose in early business on Thursday, but backed away from their overnight highs as technical selling emerged after the market's test and failure at key chart points, traders said.
"We have a buy signal at $3.6410 (a lb). We went through it and now are just pulling back. We're running into some major resistance here. We need to really break strong to get through $3.70, then on up to $3.75 to $3.80," said Larry Young, senior trader at Infinity Brokerage Services in Chicago.
Copper for September delivery traded up 1.85 cents, or half a percent, to $3.64 a lb by 10:34 am EDT (1434 GMT) at the New York Mercantile Exchange's COMEX division, ranging from an overnight low at $3.59 to the market's initial resistance at $3.66.
Young believed the target would be taken out, either by the end of this week or early next week, due to the market's firm underlying fundamentals. By 10 am, futures volumes were estimated at 5,209 lots.
Unresolved strike action in Chile and dwindling inventory levels in London copper warehouses continued to be driving forces behind the market's latest leg higher. COMEX stocks fell 112 short tonnes to 21,877 short tonnes on Wednesday.
The market's focus will now be on tomorrow's weekly Shanghai inventory data, with analysts expecting to see a 10,000-tonne increase copper stocks from last week.
Meanwhile, Chilean copper giant Codelco said operations at its Andina division in central Chile would remain suspended until at least Thursday afternoon due to protests linked to a strike by subcontracted workers.