The continuous contract of copper on the Multi Commodity Exchange (MCX) that has rallied until May this year lost its mojo and saw a price correction. That is, after hitting high of ₹812.6 the contract moderated to ₹688, losing about 15 per cent.
But the price level of ₹688 acted as a strong base, restricting the downward movement below it.
On the other hand, the contract has been struggling to break the price band of ₹745 and ₹750, essentially trading within a range.
Nevertheless, the contract has been showing signs of positive signs as it has been rising since the beginning of October i.e., it rallied from about ₹690 and is now hovering around ₹735.
Bullish bias
Supporting the bullish bias, the relative strength index (RSI) has entered the bullish territory and the moving average convergence divergence (MACD) signals signs of fresh uptick.
Also, the average directional index (ADX) is showing that bulls are at an advantage over the bears.
Although the above factors show that likelihood of a rally is high, the resistance at ₹750 should be breached before one can consider taking long positions. If the hurdle at ₹750 is broken, the futures will most likely rally to ₹770 and then possibly to ₹780, a considerable resistance level. Above this, it can touch ₹800.
So, traders can go long if the contract breaks out of ₹750. Initial stop-loss can be placed at ₹716 and revise it upwards to ₹760 if the contract moves past ₹780.
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