Copper prices have taken a hit today, as risky commodity prices get hammered by spreading risk aversion. This risk aversion has driven flight into the safety provided by the US Dollar, which is presently at 4-month highs.
The rising coronavirus cases and extended lockdowns in Europe are sparking fears of a delay in global economic recovery, which could hurt the industrial demand required to sustain the upside in copper prices. The apparent 3rd wave of coronavirus cases has easily beaten down the manufacturing PMI results of Thursday, which had shown vastly improved business activity in the German and French manufacturing sector.
Copper price is down 2.44% as of the time of writing.
Today’s downside move has violated the 3.9970 support but is having a hard time taking out the 3.9535 support level just below it. This has allowed the copper price candle for the day to pull back slightly to the upside, staying just north of 3.9535.
Continuation of the descent is required to complete the measured move of the triangle’s breakdown to 3.7345, but copper price bears need to take out 3.8340 and 3.7945 for this to occur.
On the other hand, bulls will need to push from the current support to initiate a move above $4/pound, bringing 4.2015 into the equation as the next upside target. This move needs to transcend the psychological resistance at 4.00 (more realistically, 3.9970), with 4.2755 and 4.3995 lining up as additional barriers to the north. The latter would send copper prices to decade-old highs.
