The continuous futures contract of copper on the Multi Commodity Exchange (MCX) fell off the resistance at ₹800 early this week. It is currently trading at ₹767. Although the momentum is in favour of the bears, there is a support at ₹765, which can arrest the decline.
On the back of the support at ₹765, the contract might start consolidating just above that level. But if there is a rebound, the price could go back up to ₹800.
On the other hand, if the contract falls below ₹765, we might see a quick fall to ₹745 – its nearest support. Note that a breach of ₹745 can confirm a double-top pattern, which hints at a deeper fall. As per the pattern, if the contract invalidates the support at ₹754, it will open the doors for a fall to ₹690.
Although the inclination is bearish, traders can stay away from taking fresh positions. Consider going short with a stop-loss at ₹775 if the copper futures slip below the support at ₹765. Book profits at ₹745. This is a short-term trade.
Thereafter, fresh positions can be initiated based on how the contract responds to the support at ₹745.