Copper Futures: Emerging demand disruptions to bring renewed weakness – Charles Schwab

Copper heads into the second half of the year rising as the August 2020 Copper futures (HGQ20) shows a strong upward trend in prices, with the August contract up 24% since its April 1 close of 2.185. However, a second coronavirus wave could stall the run, Kevin Cassidy from Charles Schwab informs.

Key quotes

“With parts of the globe re-emerging from various degrees of lockdowns, copper inventories have been steadily declining the past few weeks.  While these are positive developments, the lingering fear of a second wave of the virus and the potential of lockdowns returning may cause a slowdown in both the mining and manufacturing of copper, which may lead to an increase of price volatility in the coming weeks.” 

“Copper is currently trading above all of the major moving averages and is currently testing short-term resistance in the 2.71-2.72 range. If the market is able to press through near-term resistance levels, we see longer-term resistance around the 2.80 level which was last seen in late January. Short-term support is found around 2.60 with longer-term support found near the May lows of 2.30.”

“The 14-day RSI has recently moved into overbought territory after having remained above 60 for the entirety of June. While this shows the recent strength of prices during the second quarter, any disruptions to emerging demand may lead to renewed price weakness.”