The copper futures contract traded on the Multi Commodity Exchange (MCX) was very volatile last week. After an initial decline to an intra-week low of ₹321.2 per kg the contract bounced back to close marginally on a positive note at ₹328.5. This volatility has resulted in formation of a hanging man candlestick pattern in the weekly chart which is a bearish indication. Also, the contract has encountered a key resistance at around ₹328 once again. Witnessing selling pressure, the contract subsequently started to the decline in this week and has fallen almost 2 per cent in the first two trading sessions. On Wednesday, the contract was choppy trading at around ₹322.4 levels. Since mid-September, the contract has been moving sideways in a narrow band between ₹322 and ₹328 with negative bias. The contract now tests the lower boundary of this range. The daily relative strength index has re-entered the neutral region from the bullish zone indicating bearish momentum. Both the daily as well as weekly price rate of change indicators are featuring in the negative territory implies selling pressure.

A decisive plunge below the current support level of ₹322 can pull the contract down to down to ₹317 in coming trading sessions. Traders with high-risk appetite can consider selling the contract in rallies at around ₹325 with a stop-loss at ₹329. Targets on resumption of the down move are ₹320 and ₹317. Strong fall below ₹317 will strengthen the medium-term downtrend and drag it to ₹314 and ₹310. Next supports are at ₹305 and ₹300.

On the other hand, a decisive rally beyond the immediate resistance as well as the upper boundary at ₹328 can alter the bearish stance and take the contract up to ₹335 and ₹340 levels.

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

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