The bullish outlook for a rally to ₹400/kg in the copper futures contract traded on the Multi Commodity Exchange (MCX) mentioned in this column last week did not materialise.

The contract recorded a high at ₹391.25 on June 10 and reversed sharply lower from there.

It is currently trading at ₹372. The outlook is bearish now. Immediate resistance is at ₹380 and the next key resistances are poised at ₹383 and ₹389.

Any intermediate rallies could attract fresh selling interest in the market at higher levels.

Immediate support is at ₹370. A corrective bounce from this level cannot be ruled out.

So short-term traders can stay on the sidelines at the moment and wait for a bounce to initiate short positions at higher levels. However, traders with a medium-term perspective can go short at current levels. Stop-loss can be placed at ₹382 for the target of ₹360.

Intermediate rallies to ₹380 can be used to accumulate short positions.

The next key support to watch is at ₹367 – the 61.8 per cent Fibonacci retracement level.

A break below this level can drag the contract lower to ₹357 in the coming weeks.

The outlook will turn bullish only if the contract records a strong break and close above ₹392 – the 200-day moving average.

Such a break will ease the downside pressure and take the contract higher to ₹400 and even higher levels there after. But such a strong reversal and rally looks unlikely at the moment.

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

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