Southern Copper Rebounds 4% After Testing Key Support At $88.73

Southern Copper (SCCO) closed at $94.16, rising 4.00% in the most recent session after recovering from a sharp intraday low of $89.87. This rebound occurred following a significant 6.33% decline the prior day, suggesting heightened volatility near potential support levels. The price action forms a bullish engulfing pattern on the daily chart, indicating potential short-term recovery momentum after testing lows around $88.73.
Candlestick Theory
Recent price action reveals key developments. The substantial bearish candle on July 30th (high: $98.10, low: $88.73, close: $90.54) was followed by a bullish engulfing pattern on July 31st, closing near the session high ($94.16) after testing $89.87. This pattern near the $89.87-$88.73 zone suggests strong buying interest establishing a critical support level. Resistance is evident near $98-$100, where multiple prior daily closes occurred (July 23-25, 28-29). The long lower wick on July 30th ($88.73) reinforces this as a key support zone.
Moving Average Theory
The 50-day moving average (approx. $94.50) was breached during the recent rally, turning this into immediate support. However, price remains below the declining 100-day (~$97.20) and 200-day (~$99.00) averages, confirming the longer-term downtrend established since the April high of ~$120. A potential bearish death cross is forming as the 50-day nears a crossover below the 200-day. Consecutive closes above the 50-day MA would be needed to suggest medium-term trend stabilization.
MACD & KDJ Indicators
MACD shows a developing bullish crossover on the daily timeframe, with the histogram turning positive – signaling recovering momentum. The KDJ oscillator exited oversold territory (K-line crossing above 20) and shows a bullish crossover (K>D), supporting near-term upside potential. However, both indicators remain below their midlines, suggesting momentum is not yet decisively bullish. KDJ’s current readings (K: ~45, D: ~38) indicate room for further upside before overbought conditions.
Bollinger Bands
Price rebounded from below the lower Bollinger Band (~$90.50) on July 30-31, a classic oversold signal often preceding a bounce. This move coincided with a volatility expansion after a period of contraction leading into the late-July decline. Price is now testing the middle band (20-day SMA, ~$94.50). Sustaining above this level could target the upper band near $100. The band width expansion supports further directional movement.
Volume-Price Relationship
The July 30th sell-off ($90.54 close) saw significantly elevated volume (5.02M shares vs. 30-day avg ~1.8M), signaling capitulation. The subsequent 4% rally occurred on lower but still above-average volume (2.94M), suggesting cautious participation in the rebound. Volume divergence exists – the sharp down day had higher volume than the recovery rally – warranting caution about the rally's sustainability without confirming volume expansion on continued upside.
Relative Strength Index (RSI)
The daily RSI (14-period) rebounded sharply from near-oversold levels (~30 on July 30th) to its current reading near 49. This exit from oversold territory supports the recent bounce. RSI has room to climb towards the neutral zone (50-60) before signalling potential overbought risks. The swift recovery from oversold aligns with bullish momentum signals.
Fibonacci Retracement
Drawing Fib levels from the significant April peak (~$120) to the recent July low (~$88.73) yields critical retracement zones. The 23.6% level ($96.30) was tested and held as resistance intraday on July 29th. The current price ($94.16) approaches the 38.2% retracement ($95.50), aligning with the prior July swing low/resistance area near $95.50-$96.00. The 50% retracement level at $99.00 coincides with the cluster of the 200-day MA and major July resistance. Reclaiming $95.50-$96.00 is critical for further upside potential towards $99.
Confluence & Divergence
Confluent bullish signals emerged near $89, including the bullish engulfing candlestick, Bollinger Band bounce, RSI oversold reversal, and Fibonacci support. Major confluence resistance exists near $95.50-$96 (38.2% Fib, 50-day MA, prior support/resistance pivot). A key divergence exists between the KDJ/MACD bullish crossovers and the lack of confirming volume on the rebound. Furthermore, while price tested significantly lower lows in late July ($88.73 vs prior $92.09), the RSI made a notably higher low (30 vs ~25 in early June) – a potential positive divergence suggesting weakening downward momentum. However, this needs confirmation through decisive price action above resistance levels.