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The copper futures contract traded on the Multi Commodity Exchange (MCX) tumbled over 4 per cent in just five trading days from the level of ₹375 on June 15 to ₹359 on June 19. The overall downtrend that had begun in May seem to have found a temporary bottom. The contract recorded a low of ₹359.15 on Friday and has reversed sharply higher from there. It is currently trading near ₹368. Immediate support is at ₹363. If the contract can manage to sustain higher, then the current up move can extend further to test the next resistances at ₹375 and ₹377 in the coming week. A break above ₹377 can take the contract further higher to ₹383 – the 38.2 per cent Fibonacci retracement resistance level. However, the possibility of the overall downtrend resuming after this corrective rally cannot be ruled out.
Short-term traders with high risk appetite can take a contrarian trade and go long at current levels. Stop-loss can be placed at ₹361 for the target of ₹377.
The contract will come under pressure again if it declines and records a close below ₹363. In such a scenario it can fall to ₹357 which is an important support level to watch. A further break below ₹357 will increase the downside pressure and will have the potential to drag the contract lower to ₹340.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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