News out of Peru gave traders a reason to pause and rethink on Monday and Tuesday as reports say leftist political candidate Ollanta Humala has taken the lead in the latest polling.
Along with Peruvian stocks copper, gold and silver all turned south on Monday and were having trouble maintaining an upside bias on Tuesday. Peru is the second-leading copper producer, the largest silver producer and the fifth-largest gold producer.
I last reported that copper prices looked to be in a correction off of the February highs. Holding support at the 404 area that correction appears complete with the larger rally picking up again. Thus far I can count a clear Elliott 5 waves up off the 407 low which gives stronger support to the sustainability of an upside move.
The current news out of Peru looks to have kicked off a small corrective phase that shouldn't last too long or do much price damage. Support at 431 has controlled downside thus far and expectations would be for a small intervening rally to be followed by an additional leg down. Again first support would remain at 431 unless substantially broken - below there would be support at 426.53 and then 422.06 which represent .50% and .618% retracement levels of the up move labeled "1" on the chart below.
Technically, the rally off of 407 produced a quick move into overbought readings which also supports a correction ensuing now. Expectations would be for this oscillator to drop back to at least neutral before the larger rally phase picks up again.