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Copper futures contract traded on the Multi Commodity Exchange (MCX) plunged 4 per cent to settle at ₹301.3/kg in the previous week.
However, the contract found support at around ₹300 and started to move higher. On Wednesday, the contract has surged almost 3 per cent to trade at ₹313.7. This rally has breached a key resistance at ₹310 as well as the 21-day moving average.
Nevertheless, the stock now faces a vital resistance at ₹315 where the 50-day moving average is also poised. The daily relative strength index has entered the neutral region from the bearish zone.
Both the daily and weekly price rate of change indicators are featuring in the positive terrain implying buying interest.
A decisive break above ₹315 can take the contract higher to ₹320 which is key trend-deciding level. Strong break-out of ₹320 will alter the downtrend and push the contract higher to ₹325 and then to ₹335.
Traders with a short-term view should tread with caution and initiate fresh long position on a rally beyond ₹315 for the target of ₹320. Stop-loss can be maintained at ₹312.
Conversely, if the contract fails to move beyond ₹320 then the short-term downtrend will be in place and it can decline to ₹310 once again.
Key supports are placed at ₹305 and ₹300.
An emphatic plunge below ₹300 can drag the contract down to ₹295 or even to ₹292 in the medium term.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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