Copper price has surged last week. We had expected a rise to ₹780 per kg and an extended rise to ₹800-810 in this column last week. As it turned out, the Copper futures contract on the Multi Commodity Exchange touched a high of ₹804 per kg and has come down from there. It is currently trading at ₹800 per kg.
Outlook
The region around ₹800 is a strong resistance. Failure to get a strong follow-through rise from here can trigger a corrective fall this week. In that case, the contract could touch ₹780-₹775 in a week or two. A fresh bounce thereafter can take the price up to ₹800 again. A decisive break above ₹800 can take the contract up to ₹840 thereafter.
The region around ₹770 is a very strong support. The contract has to decline below this support to turn the outlook negative. Only in that case, a fall to ₹740-730 will come into the picture.
However, looking at the price action on the charts, we expect the copper futures contract to sustain above ₹770 and rise to ₹840 in the coming weeks. Whether this rise is going to happen from the current levels or after a corrective dip to ₹780-775 is to be seen.
Trade strategy
Traders can wait for dips. Go long at ₹785 and accumulate at ₹775. Keep a stop-loss at ₹760. Trail the stop-loss up to ₹795 as soon as the contact moves up to ₹805. Move the stop-loss further up to ₹810 when the price touches ₹820. Exit the long positions at ₹830.