The Copper Futures contract on the Multi Commodity Exchange (MCX) continues to remain bearish. As expected, there was a corrective rise last week. However, that was short-lived, and the upside was capped at ₹760 per kg. The contract spiked to a high of ₹760.95 last week and declined from there. It is currently trading at ₹748 per kg
Outlook
The short-term outlook is bearish. Currently, copper prices seem to be consolidating between ₹730 and ₹760. This sideways consolidation within the downtrend can continue for some more time. As such one more leg of rise to test ₹760 again cannot be ruled out.
However, the upside will be capped at ₹760. Also, there is a bearish moving average cross over on the daily chart around ₹760. So, the contract can reverse lower again. There are high chances that thecopper price declining below ₹730. That will take the contract down to ₹710 and ₹700 in the short-term
To become bullish, the copper futures contract will have to see a decisive rise past ₹765 and negate the fall to ₹710-700. But that looks less probable.
Trade Strategy
Our short positions suggested in three tranches at ₹733, ₹750 and ₹760 has been triggered. Now the average holding price for the short positions is at ₹747. We suggest traders to follow the same strategy.
Retain the stop-loss at ₹775. Trail the stop-loss down to ₹740 as soon as the contract falls to ₹720. Exit 50 per cent of the shorts at ₹710 and then revise the stop-loss for the rest to ₹722. Exit the balance at ₹700.