The continuous futures contract of copper on the Multi Commodity Exchange (MCX), which began the uptrend in March 2020 from about ₹336, rallied throughout the year and notably, it extended in 2021 as well. That is, the contract appreciated till May, although there was a minor corrective phase towards the end of February this year. The futures continued to make higher highs and higher lows and looked set to scale more heights.

However, after marking a high of ₹812.6 in the first week of May, the contract stared to move southwards. While it bounced off the support at ₹685, the contract was unable to move beyond the hurdle of ₹780.

For the past three weeks, the contract has been on a descent and slipped below the support of ₹740. If the contract witnesses a daily close below ₹717, the futures can attract more sellers as it would increase the possibility of the price touching ₹700. Affirming the bearish outlook, the price is below both 21- and 50-day moving averages and the relative strength index (RSI) has entered the bearish zone.

Also, the moving average convergence divergence (MACD) on the daily chart is tracing a downward trajectory and the average directional index (ADX) is showing that, as it stands, the bears are stronger than the bull.

The above factors show that copper futures is likely to see further decline. But since ₹717 is a considerable support, one can initiate fresh short positions with stop-loss at ₹732 below ₹717. Targets can be ₹700 and ₹685.

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