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After rallying continuously for over three weeks, the copper futures contract traded on the Multi Commodity Exchange (MCX) paused in the last one week. The contract is consolidating sideways between ₹431 and ₹438 a kg since last Thursday. A breakout on either side of this range will decide the ensuing trend.
The level of ₹438 which is the 38.2 per cent Fibonacci retracement level is a key short-term resistance level for the contract. Given the fact that the MCX-copper has risen sharply by about 10 per cent in less than a month, there is a high probability for this resistance at ₹438 to hold. Inability to breach this level can trigger an intermediate corrective fall in the contract in the coming days. Such a fall candrag the contract lower to ₹425. This will be a good opportunity for traders to initiate fresh short position.
If the contract reverses lower from ₹438, short-term traders can go short at ₹437 with a stop-loss at ₹442 for the target of ₹427.
On the upside , the current uptrend canextend further only if the contract breaches ₹438 decisively. Fresh long positions can be avoided until this level is breached. Such a breakout can take the contract higherto ₹431 in the near-term. It can also pave way for an up move to ₹452 – the next key 50 per cent Fibonacci retracement resistance level.
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