Copper futures on the Multi Commodity Exchange (MCX) witnessed a price drop between early September and the first week of October. During this period, it dropped from about ₹750 to ₹700.
However, after falling to the support of ₹695-700 region, the contract seems to have come out of the selling pressure. There was a recovery where copper futures reached ₹714 last week, before softening to close at ₹700.45 on Wednesday.
The chart shows that copper futures is attempting to form a double-top, which if confirmed, means a bullish trend reversal. The neck-level of the pattern, which the contract should breach to confirm the reversal is at ₹714.
Should the above-mentioned breakout occur, the contract can extend the upside to ₹730. The rally could even extend to ₹740.
On the other hand, if copper futures fall below ₹695, we can expect one more leg of downtrend, which can drag it to ₹680 swiftly. A breach of this can lead to a fall to ₹660.
Although the contract seems to be forming a base, there is no solid sign of a bullish trend reversal. Hence, traders can stay on the fence for now.
Go long if copper futures rally past the resistance at ₹714. Place stop-loss at ₹705. When the contract touches ₹730, revise the stop-loss to ₹715. Book profits at ₹740.