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The copper futures contract traded on the Multi Commodity Exchange (MCX) reversed higher, and is up by over 2 per cent in the past week, contrary to expectations of a fall. Positive US housing stats and existing home sales data, helped trigger the reversal in the MCX-copper futures.
However, the contract failed to breach its 200-day moving average , pegged at ₹430 per kg. The contract cooled its advance, after recording a high of ₹431.3 on Monday. The immediate outlook for the contract is mixed. The weekly chart suggests that the contract can trade sideways between ₹414 and ₹433 in the short-term. A breakout on either side of this range will decide the next leg of move. A break above ₹433 can take the contract higher to ₹440. On the other hand, a fall below ₹414 can drag it down to ₹408.
Within the sideways band of ₹414-433, the contract is now moving lower, from the upper end of the range. This signals a high probability for the contract to decline to ₹414 in the coming days. It is advisable to stay on the sidelines and wait for a trend to emerge. However, traders with high risk appetite can initiate fresh short position at current levels (₹424 levels) with a stop-loss at ₹428 for the target of ₹419.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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