Copper futures (November expiry) on the Multi Commodity Exchange (MCX) saw its price decline in September. The contract has been oscillating between ₹695 and ₹715 since early October as the bears lost the momentum.
Last week, it closed at ₹711.5. Currently, the contract is testing the upper boundary of the band. Notably, the price has now moved above both 20- and 50-day moving averages (DMAs). If copper futures break out of ₹715, it can see a swift rally to ₹730, its nearest hurdle. Subsequent resistance is at ₹740.
On the other hand, if the contract falls from the current levels, there is a support at ₹706 where the 20-DMA currently lies. If copper futures slip below this level, it can retest the lower band of the range at ₹695.
Trade strategy
Stay on the fence and initiate fresh buys when copper futures break out of the resistance at ₹715. Target and stop-loss can be at ₹730 and ₹708, respectively.
Traders holding shorts can retain the trade with stop-loss at ₹717. But once ₹715 resistance is clearly breached and the stop-loss at ₹717 is triggered, go long as suggested above.