Copper futures have been stuck in a sideways range between ₹410 and ₹421 a kg since the beginning of this month. The contract tested the upper end of this range on Tuesday and reversed lower from there. It is currently trading at ₹417. The immediate outlook is not clear. A breakout on either side of ₹410-421 band will decide the next leg of move for the contract. Traders can stay out of the market at the moment and wait for the breakout to take trades accordingly.
A break above ₹421 will be bullish. It can then take the contract higher to the targets of ₹424 and ₹430. In such a scenario, traders can take long positions at ₹422 with a stop-loss at ₹417 for the target of ₹429.
On the other hand, the short-term outlook will turn negative if the contract breaks below ₹410. Such a break can pull the contract lower to ₹405 and ₹400. In that case, traders can go short at ₹408 with a stop-loss at ₹411 for the target of ₹403.
However, the overall uptrend that has begun from the January low of ₹332.8 remains intact. Strong support is in the ₹400-390 zone which can limit the downside for the contract if it declines below ₹410 in the coming days. Having said this, a strong break above ₹421 will increase the bullish momentum and open doors for the medium-term target of ₹440.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.