Copper price is lower on the day after new US-China tensions erupted yesterday. Washington is accusing Beijing of high-level cyber-attacks against academic and medical institutions in 11 countries.
The US has accused China of carrying out cyber-attacks against institutions involved in research into coronavirus treatments and vaccines, specifically blaming two hackers in China for stealing sensitive information worth hundreds of millions of dollars.
The news has served to stall the surge in copper prices, which had hit 2-year highs yesterday after the agreement by EU leaders on a new economic stimulus plan. Recall that supply concerns from Chile had driven prices higher, as the coronavirus ravaged the copper-producing regions in Northern Chile, the world’s largest copper producer.
Copper mining company BHP had earlier stated that it expected to lose 5% to 14% of its copper output in the 2020/2021 fiscal year, scheduled to terminate in June 2021.
Technical Outlook for Copper Price
It is yet unclear whether the fall in copper price is simply due to profit-taking by early bulls, or if the new US-China tensions are provoking fears of some form of sanctions against China. Any possible penalties could be viewed as being potentially damaging to the manufacturing sector still battling to recover demand to pre-coronavirus levels.
The current price action shows the emergence of a bearish engulfing pattern at the 2.9795 resistance. If this setup remains intact at the close of the day, we could see further bearishness, especially if an outside day candle forms to take copper price below the 2.8695 support level. Such a move opens the door towards the 2.8020 support, with 2.7490 and 2.6860 waiting in the wings if there is a further decline.
On the flip side, a break above 2.9795 is required to form a higher high that indicates a continuation of the uptrend. This move would then be able to aim for 3.0920 as the new target, with 3.1865 lying just ahead as a potential new upside target if price advance is substantial.