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The price of copper futures has been on a decline since early March this year. The continuous futures on the Multi Commodity Exchange (MCX), after marking a high of ₹886 in the first week of March, made a U-turn and hit a low of ₹601 two months ago.
Although it has recovered to the current level of ₹645, the overall trend remains bearish. The price band of ₹675-700 is a strong resistance and while the contract remains below these levels, the bears will be at an advantage. Substantiating the bearish outlook, the RSI and the MACD on the daily chart are in their respective negative territory.
We expect the contract to slip below ₹600 to touch ₹585, a support level, in the near-term. Subsequent support is at ₹545.
Based on the above, we had recommended initiating fresh short positions at around ₹660, with stop-loss at ₹715. One can continue to hold these shorts. Bring the stop-loss down to ₹670 when the contract slips below the support of ₹600. Tighten it further to ₹615 when the contract touches ₹585. Exit the shorts at ₹550. The price level of ₹550 is a strong support against which the contract could see a bounce.
That said, for fresh shorts, the risk-reward ratio at the current level is not attractive. So, wait and go short in case the contract rises to ₹660. Adjustments post initiating the trade can be made as mentioned above.
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