The copper futures contract traded on the Multi Commodity Exchange (MCX) has dropped sharply by 3.6 per cent in the past week breaking its ₹410-421 sideways range. The contract recorded a low of ₹401.5 a kg. It is currently hovering at ₹402. Technically, the psychological support at ₹400 is holding well at the moment. But, the contract is expected to remain under pressure.

Therefore, the chances of the current fall extending below ₹400 towards ₹390 and ₹388 cannot be ruled out.

However, there are series of supports available in the ₹400-388 zone. The 200-day moving average is at ₹395, trend-line supports are at ₹390 and ₹388. As such the downside from current levels is expected to be limited. A fall below ₹388 looks unlikely. Having said this, there is a strong likelihood of a reversal from ₹388-390 in the coming days.

Since the overall trend is up, it is wise to initiate long positions at lower levels rather than taking shorts at current levels. Traders can start buying at ₹395 and accumulate long positions at ₹390 and ₹388. Stop-loss can be placed at ₹380 for the target of ₹415.

The outlook will turn bearish only if the contract records a decisive break and close below ₹388. Such a break can drag the contract lower to ₹378 there after.

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

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