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The sharp reversal from the low of ₹401.25 a kg in copper futures traded on the Multi Commodity Exchange, found resistance at ₹410.7 on Monday. The contract has reversed lower from this low and is currently trading near ₹405.
The contract seems to be struggling to gain bullish momentum. The immediate outlook is bearish. Resistance is at ₹407. Although there is support at ₹404.4 – the 21-day moving average level – the contract is expected to remain pressured to decline below this support level as long as it trades below ₹407. Having said this, a fall to ₹400 is more likely in the coming days.
Traders with a short-term perspective can go short at current levels. Stop-loss can be placed at ₹408 for the target of ₹401.
Although ₹400 is strong support, the reversal from ₹410 last week has now increased the danger of a break below this level. A strong break below ₹400 can take the contract to ₹397 and ₹395 thereafter.
On the other hand, if the contract manages to reverse higher from ₹400, it can then rise to ₹405 and ₹410.
The outlook will turn bullish only if the contract records a strong break and close above ₹410. Such a break can take the contract higher to ₹415 – the 200-day moving average resistance level.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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