The copper futures contract traded on the Multi Commodity Exchange (MCX) witnessed a corrective rally over the past week to reach its resistance at ₹322 a kg. However, it has reversed lower from there as expected.

The contract recorded a high of ₹321.65 on Friday and has reversed sharply lower from there. It is currently trading at ₹308.50.This downward reversal has also happened from a key 38.2 per cent Fibonacci retracement resistance which is also poised near ₹322.

This reversal keeps the overall downtrend intact and signals that a fresh leg of down move has started.

As long as the contract trades below ₹322, there is a strong likelihood of the contract declining below ₹300 in the coming days.

Such a fall can increase the downside pressure and drag the contract to the previous low of ₹293.5. Further break below ₹293.5 can pull the contract lower to ₹285 thereafter.

The contract can witness volatile swings in the near-term following the outcome of the US Federal Reserve meeting. So, the short-term traders can stay out of the market.

However, traders with a medium-term perspective and with a high risk appetite can go short at current levels. Stop-loss can be kept wider at ₹325 for the target of ₹288. Intermediate rallies to ₹315 and ₹320 can be used to accumulate short positions.

The 21-week moving average at ₹332.5 is a key resistance level for the contract. Only a strong break and a decisive close above this level will turn the overall outlook positive.

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

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