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The copper futures contract traded on the Multi Commodity Exchange (MCX) fell below its key support at ₹339 a kg in the past week.
But the down move was short-lived and the contract has reversed higher once again after recording a low of ₹335.4 on Friday. It is currently trading near ₹341.
Traders who have taken short position after the fall below ₹339 can consider exiting the position at current levels.
The bounce from the low of ₹335.4 looks strong and suggests that the fall below ₹339 is a false break. There is no immediate danger for the contract as long as it trades above ₹340. The near-term outlook is bullish. A rise to ₹345 is possible now. Short-term traders with high risk appetite can initiate fresh long positions. Stop-loss can be kept tight at ₹339 for the target of ₹345.
The contract will come under pressure once again if it declines and closes decisively below ₹340. Such a fall can drag the contract lower to ₹335.
It will also increase the downside pressure and extend the contract’s down move to ₹333 or even ₹331.
The US employment numbers are due for release on Friday.
The outcome of this data could determine the direction for the contract going forward.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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