The copper futures contract traded on the Multi Commodity Exchange (MCX) has been in a strong downtrend since the second week of October. But, this downtrend seems to have come to a pause. The contract has tanked about 7 per cent in the past week to record a low of ₹302.2 per kg on Tuesday. However, the contract has bounced back from this low and is currently trading at ₹307.

The price action on the daily chart suggests that the contract is getting strong support in the ₹303-₹302 zone. The contract may now run into fresh trouble only if it declines below ₹302 decisively. Having said this, while the contract remains above this support zone, a corrective rally to ₹310 and ₹320 levels is possible in the short-term. This can lead to a sideways consolidation phase in the range between ₹300 and ₹320 for some time.

Traders can avoid taking fresh short positions at the moment. They can wait for a bounce back rally to go short at higher levels. Traders with a short-term perspective can start initiating fresh short positions at ₹315. Stop-loss can be kept at ₹324 for the target of ₹303. Accumulate more shorts if the contract extends its up move to ₹320.

As mentioned above only a strong break below ₹302 will bring renewed pressure to the contract. Such a break will increase the danger of the contract breaking below the psychological support at ₹300 and fall to ₹290 and ₹285 levels thereafter.

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

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