The copper futures contract traded on the Multi Commodity Exchange (MCX) has a key support around ₹410/kg. The contract dipped to ₹408.7 on Friday, but bounced back immediately testing the key support . Moreover, it has breached its intermediate resistance at ₹415 by rallying sharply on Tuesday on the back of weak rupee.
The price action on the chart over last few weeks suggests that the contract lacks downside momentum. Further, Tuesday’s 2 per cent rally is significant.
This could strengthen the bullish momentum for the contract. There is a strong probability for the contract to sustain higher and extend its rally in the coming days.
Immediate support for the contract is now at ₹416.5. As long as the contract trades above this level, there is no danger for an immediate fall. Resistance is at ₹424.5 – the 200-day moving average level. A strong break above this level can take the contract higher to ₹432 in the coming days.
Traders with a short-term perspective can go long in this contract at current levels. Stop-loss can be placed at ₹415 for the target of ₹430. The outlook would turn negative if the contract declines below ₹415. Such a breakthrough can drag the contract lower to ₹409.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.