Could copper stocks be heading higher?

Tuesday, 22nd October 2019 11:58 - by Rajan Dhall

Copper markets are bullish today after the news that Escondida the worlds biggest copper mine is out of operation due to a strike.

There are two issues being reported at the moment. The Union of workers is said to be joining the unrest in the country as there are some anti-establishment protests in the nation. After the recent hike in public transport costs. Arson, looting and riots erupted over the weekend leaving at least seven dead and many injured. The other issue seems to be the safety of some of the equipment. It has been reported by some news agencies that during the strike there will be some equipment upgrades after some complaints from the workers.

Looking at the copper chart below there has been a break of the trendline to the upside. Obviously there has been some bullishness from the US-China trade talks but this coupled with the news from Chile has taken the HG (Copper) futures contract higher. The main point of resistance is $2.70/lb, a break of this would confirm a higher low higher high wave formation. If the level of resistance breaks it would also be a clear confirmation of the trend break. Price at the moment is at the volume point of control. This is the mean value area and the peak of the bell curve on the volume profile indicator on the right-hand side of the chart. This represents the price where most copper futures contracts have been traded and it acts as a pivot point for the price. As we are now above the level we can assume that sentiment is slightly bullish but the key event is the APEC meeting in Chile next month where Trump and XI are set to sign the phase one trade deal. If the deal is signed and the tone is positive we could see a move higher.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.