The copper futures on the Multi Commodity Exchange (MCX) are moving without an intent. The October contract (expiring on October 31st) has been oscillating in the range of ₹635-675 since the beginning of September. It is currently trading around ₹650.

Unless either of ₹635 or ₹675 is breached, we cannot predict the next leg of trend with confidence. Yet, the broader trend remains bearish. The contract can probably turn the short- and medium-term trend positive if it can overcome the barrier at ₹700. Resistances above ₹700 are at ₹720 and ₹760.

However, until ₹700 is decisively breached, we suggest approaching copper futures with a bearish bias from trading perspective.

If the contract resumes the downtrend and breaches the nearest key support at ₹635, it will most probably fall swiftly to the subsequent support at ₹590. Below that, ₹550 is a strong support against which the contract can see a recovery.

Trade strategy

We have been recommending shorts since the beginning of September at various price points between ₹640 and ₹675 with initial stop-loss at ₹715. Last week, we asked traders to bring the stop-loss down to ₹685. Hold these positions if you have initiated shorts earlier.

Going forward, tighten the stop-loss to ₹670 if the contract slips below the support of ₹600 and move it further down ₹615 when the price touches ₹585. Exit the shorts at ₹550.

For fresh positions, go short if there is a rally to ₹675 with above mentioned stop-loss and target levels.

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