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The copper futures contract traded on the Multi Commodity Exchange has fallen sharply in the past week by about 3 per cent. Weak economic data release from the euro zone and weak housing data from China has triggered this fall.
Technically, the contract has broken its crucial support at ₹420 per kg. Also there is a double-top reversal pattern formed on the daily chart which could add to the pressure onthe contract. The neckline resistance of this pattern is at ₹424.
The immediate outlook is bearish now and the fall can extend further. Immediate resistance for the contract is at ₹420. Price action on the daily chart over the last few days suggests that the contract is witnessing selling pressure as it nears this resistance. While the contract trades below ₹420, a fall to ₹410 looks likely in the coming days.
Traders with a short-term perspective can go short now. Stop-loss can be kept at ₹425 for the target of ₹411. Intermediate rallies to ₹424 can be used as an opportunity to accumulate short positions. The outlook will reverse only if it breaches ₹424. Next target is ₹435.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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