Since the calendar turned June, the copper prices witnessed a sharp fall. Consequently, the copper futures on the MCX (Multi Commodity Exchange) began a fresh leg of downtrend from the resistance level of about ₹810. It fell over the past few weeks and breached the key supports at ₹745 and ₹732.
On Thursday, the contract began the session below the support at ₹732, opening the door for further weakness. At ₹725, the nearest support can be spotted at ₹710. Below this, there is a support at ₹690. We expect copper futures to touch ₹690 in a couple of months.
The contract could see a corrective rally from the current levels by moving up to ₹745 before dropping to ₹710 and then ₹690.
Traders can consider initiating fresh shorts at the current level of ₹725, and add more shorts when it rallies to ₹745. Place the initial stop-loss at ₹760. When the price declines to ₹710, liquidate three-fourth of the total shorts that you hold and tighten the stop-loss to ₹732. Liquidate the remaining shorts at ₹690.
Note that there are high chances for the contract to rebound from the support band of ₹685-690. Hence, it is prudent to exit the shorts at ₹690.