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Copper Prices Broke 17-Year Uptrend Amid Coronavirus Pandemic

Copper Prices Broke 17-Year Uptrend Amid Coronavirus Pandemic

Dimitri Zabelin, Analyst

COPPER PRICES, CORONAVIRUS, GLOBAL GROWTH, RECESSION – TALKING POINTS

  • Copper outlook bearish after prices break below a 17-year uptrend
  • Cycle-sensitive commodity suffered largest one-day loss since 2008
  • Coronavirus pandemic pressuring demand for cycle-sensitive input

COPPER PRICES BREAK 17-YEAR UPTREND

On Wednesday, copper prices suffered their largest one-day loss since the 2008 financial crash as panic-induced selling from the coronavirus pandemic pressured the growth-oriented commodity. The commodity has faced aggressive liquidation pressure since the outbreak of the coronavirus has wide spread efforts to contain covid-19 have disrupted critical supply chains in highly-trafficked ports.

Copper Futures – Daily Chart

Copper Prices Broke 17-Year Uptrend Amid Coronavirus Pandemic

Copper chart created using TradingView

Copper’s sharp decline has in large part to do with its strong ties to cycle-sensitive industries that are now facing an uncertain future. Earlier this week, US President Donald Trump said the coronavirus may plunge the world’s largest economy into a recession. Furthermore, China – the biggest consumer of copper by a substantial margin – is also under strain as the government’s lockdown policies have imperiled supply chains.

Copper Futures – Monthly Chart

Copper Prices Broke 17-Year Uptrend Amid Coronavirus Pandemic

Copper chart created using TradingView

Looking at a monthly chart shows copper prices broke below a 17-year uptrend and continue to trade below the steep slope of eight-year descending resistance. A break of this magnitude below a floor that has withstood tests for almost two decades speaks volumes about the magnitude of selling pressure and will almost certainly not go unnoticed. Consequently, it may catalyze a further aggressive selling bout as the prospect of future demand dwindles with a wilting outlook.

COPPER TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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