Copper futures on the Multi Commodity Exchange (MCX) witnessed a corrective rally in the past week to test its resistance at ₹359/kg . In line with the expectation, this resistance has held well and the contract has reversed lower after recording a high of ₹360.85 on Monday. It is currently trading near ₹349. The overall downtrend remains intact for the contract.
The price action on the chart suggests that the contract lacks upside momentum. The reversal from the high of ₹360.85 has increased the danger of copper futures breaking their support at ₹340 now. Such a break can drag the contract to the next target of ₹320 initially and even to ₹300 thereafter. Traders with a medium-term perspective – who took short positions last week – can continue to hold on to their positions. Retain the stop-loss at ₹362 for the target of ₹320.
Traders with a short-term view can initiate fresh short position at current levels. Stop-loss can be placed at ₹357 for the target of ₹330.
Immediate resistances are at ₹355 and ₹359 which will continue to remain as a strong resistance for the contract. The outlook for the contract will turn positive only if it records a strong close above ₹359. But such a break looks unlikely at the moment.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.