Copper prices have dropped sharply over the last one week. The copper futures contract traded on the Multi Commodity Exchange (MCX) hit a high of ₹715 per kg on Monday last week, and has declined about 2 per cent from there. The contract is currently trading at ₹700 per kg.
The outlook is bearish. The region between ₹707 and ₹710 is a strong resistance zone. Any intermediate bounce this week is likely to be capped at ₹710. Fresh sellers are likely to emerge at higher levels.
The copper futures contract can fall to ₹670 in a week or two. A break below intermediate support at ₹685 can drag the contract going forward.
If the contract sustains above ₹685 and bounces back, a rise to ₹700 and higher levels is possible. In that case, the contract can remain in a range of ₹685-₹715 for some time. The stock has been oscillating in this range for more than a month now. As such the price action around ₹685 will need close watch.
Traders can go short now. Accumulate shorts on a rise to ₹708. Keep the stop-loss at ₹715. Trail the stop-loss down to ₹698 as soon as the contract falls to ₹693. Move the stop-loss down to ₹692 when the contract touches ₹689 on the downside. Exit the shorts at ₹685.