The copper futures contract traded on the Multi Commodity Exchange (MCX) is facing strong hurdle at ₹420/kg. As expected, the contract failed to breach this level and fell to ₹412 in the past week. It is now hovering above this important support level of ₹412 since Monday.
The 21-day moving average is also poised near the same level of ₹420 which now makes it a very strong resistance for the contract. So the outlook continues to remain bearish. While it trades below ₹420, there is a possibility of it breaking below the immediate support at ₹412 to fall to ₹409. A further break below ₹409 can drag the contract lower to ₹400 in the coming days.
Traders with a short-term perspective can go short at current levels. Stop-loss can be kept at ₹421 for the target of ₹406.
The chances for an intermediate rise to test the resistance at ₹420 cannot be ruled out. But such rallies can be used as an opportunity to accumulate more short positions.
The bearish outlook will get negated only on a strong break and close above ₹420. The ensuing target on such a break will be ₹426. But such a sharp rally looks unlikely at the moment.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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