The global spread of the coronavirus has picked up in countries like Italy and Iran, prompting the resumption of the slump in copper prices in Monday morning trading. Copper futures are down nearly 45 cents as increased global spread of the coronavirus prompted risk-off sentiment which led to the selloff in risky commodity assets.
The current copper price is $2.55103 and is now pushing towards crucial support at $2.53518, with the coronavirus now sweeping towards Western Europe and prompting lockdowns in Italy. Several games in the domestic soccer league were suspended over the weekend. In Iran, general disinfection of entire cities has commenced after a member of parliament said that up to 50 persons had died in Qom, a city in Iraq. The MP, Amirabadi Farhani, has accused the Iranian health ministry of covering up the true extent of the outbreak in Iran, something the health ministry has denied vehemently.
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Technical Outlook for XCUUSD
Copper price action is captured on the XCUUSD, where I identified an evolving rising wedge pattern following the downside break of price from the ascending channel. Copper price broke below the rising wedge, but pulled back up to the broken wedge border where it was soundly rejected by the lower wedge border now acting as a resistance. The horizontal resistance reinforced this resistance at 2.60232.
Copper price has been able to find more considerable downside momentum to resume the downtrend, which is the expected outcome of the rising wedge pattern. Copper price is expected to find initial support at 2.53518, where previous lows were seen on 5 August, 27 August and 3 October 2019. Below this area, support also exists at 2.49154 where previous lows of 26 August 2019 as well as 31 January and 3 February 2020 exist. This support at 2.49154 could be the point of completion of the measured move from the wedge breakout point.
On the flip side, a reversal of the risk-off sentiment could instigate a certain level of price recovery on XCUUSD, with 1.55870 being a short term resistance and 2.60232 serving as medium-term resistance.
However, the sentiment for copper price action remains bearish in the short term, and any price recoveries could be a chance to initiate sell orders on suitable rally points.
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