After testing the key support at ₹320 per kg for almost two weeks, the copper futures contract traded on the Multi Commodity Exchange (MCX) declined decisively below it on Tuesday.

The contract fell 1.4 per cent in that session to close at ₹313.8. Further, the contract has just breached its 200-day moving average support as well. The 50-day moving average poised at ₹323 was restricting the upside for the contract. Now, the contract trades well below its 21- and 50-day moving averages.

On Wednesday, the contract was down 0.6 per cent and trading at ₹312. Since encountering a key resistance at ₹340 in mid-July, the contract has been on a short-term downtrend. The daily relative strength index has entered the bearish zone from the neutral region. Both the daily price rate of change and moving average convergence divergence indicators are charting downwards, in line with the contract and are hovering in the negative territory backing the bearish momentum.

A decisive fall below the immediate support at ₹310 can pull the contract down to ₹305 and ₹300 in the short term.

Traders with a short-term view can make use of rallies to initiate fresh short positions while maintaining a stop-loss at ₹318 levels. The next support below ₹300 is in the band of ₹292 and ₹295.

On the other hand, the contract has a key resistance at ₹320 and ₹326. A strong rally above the immediate resistance level of ₹326 can push it up to the next resistance in the band between ₹335 and ₹340.

Further, a breakthrough of this resistance band is needed to reinforce the bullish momentum and take the contract northwards to ₹350 and ₹360 in the medium term.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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