Last week, the copper futures contract traded on the Multi Commodity Exchange (MCX)tumbled 4.7 per cent, breaking a key support at ₹304 per kg. The contract continued is continuing its downward journeythis week as well and has slumped 2.5 per cent so far. It currently trades around ₹294 and is testing a support at ₹293. Moreover, the contract has decisively breached its 21- and 50-day moving averages and hovers well below them.

The daily relative strength index has entered the bearish zone last week and continues to feature in this zone. Weekly RSI also feature in the bearish zone and implies downward momentum. Other indicators in the daily charts such as price rate of change and moving average convergence divergence are also hovering in the negative territory. The short-term outlook is bearish for the contract. Traders with a short-term view can initiate short position on rallies with a stop-loss at ₹300.

The contract has the potential to trend downwards to ₹284 or ₹280 on a strong fall below ₹293 . Key immediate resistances are at ₹304 and ₹310. To diminish the short-term downtrend, the contract needs to decisively move past these levels. The next important hurdle is at around ₹320. Medium-term trend has been down since September 2015 peak of ₹368. To change this trend, the contract has to rally above ₹330 levels.

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

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