The coronavirus is hurting the Chinese economy and the epidemic is mauling the demand for copper.
The spread of the coronavirus is exacerbating an already fragile Chinese economy and one of the places this is being reflected is in the demand for copper. Since 21 January the base metal’s price has declined by 10.25%. Price may fall further if the contagion intensifies.
Copper Rallies Into Retracement Resistance
The left chart shows the daily timeframe for copper. It is trading below its black 20-day SMA and the SMA is also pointing down. Moreover, its daily RSI is below 50 and is suggestive of a negative momentum. The right chart shows the hourly time frame for the base metal. Here we can see that the green 5-hour EMA has crossed below the orange 10-hour EMA (red ellipse) and that the stochastic has turned down (aqua ellipse) from an overbought position. These are bearish developments and may indicate that the bears are targeting copper once again. We note that the metal rallied into the 50% retracement of its last impulse move down before reversing.