Copper price is trading at its 6-week lows as investors react to the rising death toll brought about by the China coronavirus. XCUUSD tapped an intraday low of $2.7359 in today’s trading after opening at $2.7579.
According to recent statistics, over 440 people have been infected by the disease which is said to have begun in Wuhan, China. The death toll has also climbed to nine. In response, the Chinese government put the city on travel ban and no one is allowed to leave despite it being the Chinese New Year this coming weekend.
The recent inventories report from the London Metal Exchange also did very little to support copper price. According to the report, inventories surged to 162,925 tonnes from 38,700 tonnes across warehouses approved by the Exchange. This was bearish for the metal as it indicates that demand for the metal would soon wane given the surplus.
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On the daily time frame, we can see that copper price has pulled back most of its gains to the 50% Fib level (drawing the Fibonacci retracement tool from the low of December 3 to the high of January 16). If it closes around its current price at $2.7450, it could mean that support at its January 7 low at $2.7660 did not hold. The next floor could be around $2.7050 where there seems to be a confluence of support. For one, the price coincides with the 61.8% Fib level. Secondly, the rising trend line (connecting the lows of August 26, September 3, October 2, and December 4) and 100 SMA and 200 SMA fall along this price.
However, a reversal candle around the 50% Fib level could mean that there are enough buyers in the market to push copper price up to its recent highs above $2.8500.