Copper price action is showing vulnerability after Tuesday’s recovery, signalling that the coronavirus outbreak is once more weighing on commodity markets. Copper futures followed global stock markets lower as the asset continues to struggle following the downbeat PMI data from China. The coronavirus is spreading across the world and is now causing governments to shut down schools and public gatherings, which mirror the enforced shutdown of factories all over China. China is the world’s largest importer of copper, which it uses to fuel its numerous production facilities across the country. China also accounts for 40% of the world’s production.
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The copper futures are down on the day but are trading in a side trend following the break of the price below the second rising wedge pattern on the 4-hour chart. The range is marked by the 2.53518 support level acting as the floor, and the 2.60232 resistance acting as the ceiling.
A break below the floor of the range opens the pathway towards the 2.49154 price level, where we last saw a cluster of lows from 31 January to 3 February as well as a prior low on 1 March.
However, if the price can break above the ceiling, the 2.61415 (19.21 Feb as well as 2 March highs) becomes the next target, with 2.65456 (21 October and 5 December 2019 highs) lying overhead as the next resistance target.
We may also see some range trading before the price moves out of the range.