Copper prices are down this Thursday as the red metal struggles with safe-haven demand in the US dollar due to the extended counting period of the US elections and the possibility of legal action being taken by the Republican party.
This is occurring against the backdrop of the continued strike at the Candelaria copper mine in Chile. According to Reuters, the Mina miners’ union has reportedly rejected improved terms offered by the mine’s owners, the Canadian firm Lundin Mining. With this development, the strike is expected to continue, and this could jeopardize output from one of the world’s major copper-producing countries.
The continued strike could exert a supply-induced upward pressure on copper prices, but this has not manifested yet as increasing uncertainty about the outcome of the US Presidential Elections is starting to drive safe-haven demand for the US Dollar this Thursday.
This is not the first time a strike by miners in the copper producing belts of South America will impact copper prices this year.
Copper price on the daily chart shows that prices have retreated 0.56% on the day, with light trading volumes. Price is now testing the support at 3.0920, forming an evolving bearish engulfing pattern with Wednesday’s daily candle.
If this pattern is confirmed, a bearish outside day candle (indicating follow up selling) would be needed to send copper price below this support. This opens the door towards 3.0275 as the initial target for sellers, with 3.0010 and 2.9795 forming additional downside targets.
On the other hand, a bounce off the current support allows buyers to aim for the 3.1255 resistance target. Full recovery of the uptrend on copper prices requires a higher high above the 21 October high, to complement the higher lows of price action. This move would require a breach of the 3.1865 resistance to be fulfilled.
