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The copper futures contract traded on the Multi Commodity Exchange (MCX) has been on a near-term uptrend since taking support at around ₹305 per kg on August 31. While trending up, the contract breached a key resistance at ₹317 as well as the 200-day moving average by gaining 2 per cent on September 14.
However, after retracing 50 per cent Fibonacci retracement level of the prior downtrend, the contract encountered a key resistance in the band between ₹322 and ₹325 last week. It continues to test this resistance level.
On Wednesday, the contract fell marginally by 0.5 per cent and was trading at ₹322.8 levels. An emphatic breakthrough of the current resistance band will alter the contract’s medium-term downtrend and take it higher to ₹330 and ₹340 levels in the short- to medium-term horizon. Traders with a short-term perspective should trend with caution at this juncture. Strong rally above ₹325 will provide opportunity for the traders with a short-term perspective to initiate fresh long positions with a fixed stop-loss.
Conversely, inability to move beyond ₹325 can pull the contract down to test its 200-day moving average and the immediate support at ₹317 in the near future. Next supports are at ₹314 and ₹310. Decisive fall below ₹310 will reinforce the downtrend and pull the contract down to ₹305 or event to ₹300 in the short-term.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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