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The rally in the copper futures contract traded on the Multi Commodity Exchange (MCX) paused last week.
The contract recorded a high of ₹343.4 per kg on March 3 and has cooled off since then. It fell to a low of ₹331.8 on Tuesday and has bounced back just slightly from this level. It is currently trading near ₹335.
The contract has been hovering around the 200-day moving average at ₹334 over the last few trading sessions.
Important resistance is at ₹341 – the 38.2 per cent Fibonacci retracement level. Inability to breach this hurdle can keep the contract under pressure.
A strong close below the 200-day moving average could drag the contract lower to ₹327 initially. A further break below ₹327 can drag it lower to ₹322 or ₹320.
On the other hand, a strong break above ₹341 can strengthen the bullish momentum. Such a break will keep the uptrend intact.
The contract can then rise to ₹350 and ₹356 – the 61.8 per cent Fibonacci retracement resistance level.
Traders with a short-term perspective can wait on the sidelines at this juncture.
Long positions can be initiated after the contract breaks above ₹341.
Stop-loss can be kept at ₹331 for the target of ₹355.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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