Since the copper continuous futures contract on the Multi Commodity Exchange of India (MCX) got support at ₹335/kg in March 2020, it has been on a long-term uptrend, forming higher peaks and higher troughs.

While trending up, the contract had decisively breached a key long-term resistance at ₹550 in November 2020 and a key short-term hurdle at ₹630 in early February this year. Thereafter, the contract accelerated and encountered a barrier at ₹730 in late February.

Triggered by negative divergence in the daily relative strength index, the contract changed direction and has been in a near-term correction since then. On Monday, the contract has declined 1.3 per cent and traded at around ₹681. It is testing a key base at ₹670 levels. A strong downward break of this support can extend the corrective decline and pull the contract down to ₹640 levels.

The key support in the band between ₹630-₹640 can provide base for the contract and a bounce back is possible thereafter. At this juncture, traders with a short-term view can wait and initiate fresh short positions with a fixed stop-loss on a fall below ₹670 levels and exit at the support zone. That said, if the contract plummets below the vital ₹630-₹640 band can drag the contract down to ₹615 and ₹600 levels.

On the upside, a strong rally above ₹700 initially and then ₹720 is needed to alter the corrective decline and reinforce the uptrend. In that case, it can revisit ₹730 and then to ₹740 levels.

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