The copper futures contract traded on the Multi Commodity Exchange (MCX) has reversed sharply higher over 2 per cent from Monday’s low of ₹307.5 a kg. The contract is hovering below its key ₹320-₹322 resistance band which includes both the 38.2 Fibonacci retracement as well as the 50-day moving average level. It currently trades at around ₹316. A rally above this resistance zone will ease the selling pressure and take the contract upwards to ₹330 levels.
Traders with a short-term perspective can go long on a break above ₹322 with a stop-loss at ₹317 for the target of ₹330. Inability to break above ₹322 and a subsequent reversal from there will continue to keep the contract inside the ₹304-₹322 range in the short-term.
The relative strength index in the daily chart is hovering in the neutral region with a downward bias. Both the daily and weekly price rate of change indicators are featuring in the negative territory implying selling interest. These indicators suggest that the medium-term trend that has been in place since early September remains intact and also the upside could be capped even if the contract breaks above ₹322 in the short-term. . Support is at ₹304.5. A fall below this support will drag the contract down to ₹300 and then to ₹293 in the coming weeks. To alter the medium-term downtrend, the contract needs to decisively breach ₹330 for an up move to ₹340 and then to ₹350 levels over the medium-term horizon.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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