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After posting loss for six weeks in a row, the continuous futures of copper on the MCX (Multi Commodity Exchange) has seen a minor rally. While the contract closed at ₹616.4 last week, it inched up to ₹630 in early trade.
On the upside, the nearest resistance can be spotted at ₹670 where the 23.6 per cent Fibonacci retracement of the recent fall coincides. Should there be a breach of this level, subsequent resistance lies in the price band of ₹700-710.
Given that the overall trend remains bearish, a rally beyond ₹700-710 range is less likely.
We expect the contract to move up from the current level and resume the downtrend either at ₹670 or ₹700-710 region. We suggest traders to stay away now and initiate fresh positions once the contract appreciates to ₹670 and ₹700.
Strategy: Initiate shorts worth half of the intended amount when the contract moves to ₹670. Add shorts for the remaining amount at ₹700 and then place stop-loss at ₹745. When the contract slips below ₹600, revise the stop-loss down to ₹670. Liquidate all the shorts when the contract touches ₹550. This is a considerable support level and there is a good chance that the contract rebounds from this level.
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