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.
Trade strategy
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.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.