Over the past week, the price of copper declined — the continuous futures of copper on the Multi Commodity Exchange (MCX) fell after facing resistance at ₹700. It is currently trading at ₹665.
Note that the current level is a good support. The 50-day moving average lies at ₹660 and, therefore, the price band of ₹660-665 is expected to offer good support for copper futures. We expect a rebound from here, which can take the contract to ₹700 again in a week or two. A breakout of ₹700 will make sure the contract soon rises to ₹720, a key level.
However, a breach of the support at ₹660 can intensify the sell-off, where the contract could quickly decline to ₹630.
Nevertheless, since the contract is trading near a support and the risk-reward appears favourable, we suggest traders to risk taking fresh long positions on MCX-copper futures.
Go long at the current level of ₹665 and add more longs if price dips to ₹660. Place initial stop-loss at ₹652. When the contract rallies past ₹686, tighten the stop-loss to ₹672. Exit the longs at ₹700, because there could be a fall after this.
Note that this is a short-term trade recommendation.