Copper prices have been inching higher over the last few weeks. The copper futures contract on the Multi Commodity Exchange (MCX), which has been in a strong downtrend since June, had made a low of ₹402.55 per kg on August 16 and reversed higher from there. The contract has surged about 8 per cent and is currently trading at ₹434/kg.

The recent up-move from the low of ₹402.55 is giving early signs of the downtrend getting reversed. Also, this upward reversal has happened from the psychological as well a neck-line support level of ₹400. This keeps the inverted head and shoulders reversal pattern that was formed between 2015 and late 2017 intact.

Other indicators on the charts are also positive backing the bullish trend reversal. The 21-day moving average is turning around and is on the verge of crossing over the 55-day moving average. This is a positive signal indicating that the downside could be limited.

An up-move to ₹445 or ₹450 is likely in the near-term. Inability to breach ₹450 can trigger a pull-back move to ₹435. But a fall below ₹435 is unlikely. An eventual break above ₹450 will boost the momentum and will trigger a fresh rally to ₹480. Further break above ₹480 will see the up-move extending to ₹510 over the medium-term.

Traders with a medium-term perspective can go long at current levels and also accumulate at ₹425. Stop-loss can be placed at ₹390 for the target of ₹495. Revise the stop-loss higher to ₹450 as soon as the contract moves up to ₹465.

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