The copper futures contract traded on the Multi Commodity Exchange (MCX) has been on short-term downtrend ever since it hit the key resistance at ₹340 per kg on May 2.

While trending down, the contract has decisively breached its 50 and a 200-day moving average at around ₹325 and it hovers well below them.

The 3 per cent fall last week to close at ₹309.8 has strengthened the downtrend. On Wednesday, the contract fell more than 1 per cent, breaching a key support at ₹310 and trades at ₹307.4 levels.

The recent decline below the key support level of ₹310 indicates resumption of the short-term downtrend.

The daily relative strength index feature in the bearish zone backing the downtrend. Both the daily and weekly price rate of change indicators are hovering in the negative territory implying selling interest.

The contract can extend its downtrend in the short-term and test supports at ₹305 and ₹300. Traders with a short-term perspective can go short while maintaining a stop-loss at ₹313. Further fall below the ₹300 can pull the contract down to ₹295 or even to ₹292 in the coming weeks.

On the other hand, to alter the short-term downtrend, the contract needs to emphatically rally beyond ₹325.

Then, the contract can move northward to ₹330 and ₹340 levels. Immediate resistance is placed at ₹315.

Only a decisive breakthrough of the key medium-term resistance at ₹340 could reinforce the bullish momentum and push the contract upwards to ₹345.

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

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