Stock Of The Day – Southern Copper Chart Tells Savvy Traders What To Do

After trending lower for the past two weeks, shares of Southern Copper Corporation SCCO are staging a rebound Wednesday. The stock has been under pressure due to concerns over how the new tariffs will affect its profitability.

Some traders have lost money as they have been guessing where the selloff ends and bought too early. But there are savvy traders who bought at the bottom on Tuesday. They let the market tell them where to place their orders. This is why Southern Copper is our Stock of the Day.

If understood and applied correctly, technical analysis is the study of investor and trader psychology. It is psychology and emotions that create patterns that appear on charts.

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For example, one of the main reasons why support forms in markets is because of people who regret selling. They sell, but if the price moves higher, they decide to buy their shares back…if they can buy them at the same price they were sold for.

As a result, if the stock reverses and eventually returns to the selling price they place buy orders. If there is a large number of remorseful sellers placing buy orders around the same level, it can cause support to form.

You can see on the chart that the $86.00 level was resistance for Southern Copper in August 2023 and January 2024. When the price initially trended lower after, sellers thought they a good decision to sell.

In March 2024 the resistance broke and the shares ripped higher. When this happened a number of these sellers thought that selling was a mistake. They vowed to buy their shares back if they could do so around the price they were sold at.

So on Tuesday when the price dropped to around $86.00, these remorseful sellers entered the market as buyers. This large concentration of buy orders created support at the price that had previously been resistance.

If a stock is trending lower and a trader is considering buying it, they should identify former resistance levels. There is a good chance the stock may find support and reverse off of it as Southern Copper has.

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