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The copper futures contract traded on the Multi Commodity Exchange (MCX) has declined below ₹400/kg in line with the expectation. It is hovering near ₹393.
The immediate outlook is negative. The down move can extend further in the coming days. However, there are series of supports present at ₹390, ₹387.5 – the 38.2 per cent Fibonacci retracement level and ₹385 – a trend-line support level.
The presence of these supports can slow down the pace of the current bearish momentum and may halt the fall.
Therefore, there is a strong likelihood of the contract reversing higher from the supports mentioned above. Such a reversal can take the contract higher to ₹400 or even higher levels.
Traders with a medium-term perspective who have taken long position on declines at ₹395 according to the advice given in this column last week can consider holding the position.
Further dips to ₹390 and ₹388 can be used to accumulate long position. Stop-loss can be retained at ₹380 for the same target of ₹415.
The short-term traders can stay out of the market at the moment.
Wait for the contract to decline and go long at ₹388 levels. Place the stop-loss at ₹382 for the target of ₹397.
The bullish outlook mentioned will get negated if the contract records a strong break below ₹385.
Such a break will drag the contract further lower to ₹380 and ₹377 there after.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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