The continuous futures of copper on the MCX (Multi Commodity Exchange), which had been on a decline since early March, have been witnessing a rally since mid-July. It recovered on the back of the support at ₹600. However, over the past couple of weeks, the contract seems to have lost momentum and has been tracing a sideways trend. That is, the copper futures are unable to breach the resistance band of around ₹670-700.
The more the contract consolidates at the current level, the greater the chances of the contract resuming the downtrend. Also, the price action on the daily chart indicates that the recent rally could be a corrective one, giving an opportunity to initiate fresh short positions. Overall, we remain bearish on MCX copper futures and we expect the price to fall from here.
The contract could fall below the support level at ₹600. Subsequent supports are at ₹585 and ₹550.
Strategy: Considering the above factors, we suggest traders short MCX copper futures at the current level of ₹665 and add more shorts if price rallies to ₹700; place an initial stop-loss at ₹745.
Once the contract slips below ₹600, tighten the stop-loss to ₹670. Revise it further down to ₹615 when the price falls below ₹585. Exit all the shorts at ₹550.
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