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Copper has been one of the best performing commodities since March 2020 and consequently, the continuous contract of copper on the Multi Commodity Exchange (MCX) started to rally from about ₹350. Though there were intermittent moderations in price, the overall trend remained bullish. Therefore, the futures continued to head north and hit a high of ₹815 before a couple of weeks.
However, over the past couple of weeks, the contract started to decline and is currently trading around ₹750, losing nearly 8 per cent from its high. The price is now below the 21-day moving average (DMA) and indicators like relative strength index (RSI) and the moving average convergence divergence (MACD) also shows a downtick.
But there are no clear cut signs of trend reversal and the fall in price is likely to be a correction as the price is above the 50-DMA and it lies above the 50 per cent retracement level of the previous trend.
The MACD stays in the positive territory and the average directional index shows that the bulls are bears are possessing equal strength at this moment. Also, since the major trend is bullish and the contract is near a considerable support.
Given the above factors, traders can risk going long on the back of the support at ₹730. That is, buy the contract with stop-loss at ₹730 and look for a potential targets of ₹780 and ₹800 in the near-term.
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