Copper price has resumed its downside trajectory as coronavirus-induced market fears continue to permeate the financial markets on Wednesday. Copper futures on the XCUUSD fell once more by 3.9 cents to $2.49309, after global markets resumed the slide on the back of fears of the economic impact of the coronavirus outbreak.
Containment of the outbreak is far from being achieved, and the epidemic is starting to take a huge economic toll on businesses worldwide. Yesterday, several airline operators joined the growing list of companies that have downgraded earnings guidance for 2020. A slowdown in the aviation sector may impact new orders for aircraft and aircraft components, which will, in turn, negatively impact copper demand by the industry. China is the largest importer of copper, but its factories remain shuttered, and demand for risky commodity assets has dropped off, prompting the renewed selloff of copper futures on Wednesday.
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Technical Outlook for Copper
Copper is presently testing the support levels at 2.49154, where previous lows of February 4, 2020 and March 2, 2020, were last seen. If bearish price action overwhelms this support level, the next support target could be the 2.46254 price level. This price move would bring copper prices close to the Dec 2016 and May 2017 lows.
On the flip side, if the 2.49154 support successfully withstands downside pressure to its status, then we may see price recovery to 2.53518 or possibly 2.60232, depending on how strong such a price rally is.
However, the sentiment in the market continues to remain quite bearish, and any recovery in price could just be an opportunity to sell on rallies.
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