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The Copper futures contract on the Multi Commodity Exchange (MCX) is still on a corrective fall.
The bounce from the low of ₹763 per kg last week failed to gain momentum. The contract made a high of ₹780 and has come down again. It is currently trading at ₹768 per kg.
Outlook
The price action since September last year is in the form of a bull channel. Within this channel, MCX Copper has been coming down now. There is room for a further fall to ₹750 in a week or two. The level of ₹750 is the channel support.
As such a fall beyond ₹750 is less likely. We expect MCX Copper to bounce back again from around ₹750. Such a bounce will have the potential to take the MCX Copper up to ₹800 and higher levels again over the medium term.
The bullish outlook will go wrong only if the contract breaks below ₹750 decisively. In that case, MCX Copper can see an extended fall to ₹730-₹720 and even lower levels going forward.
But our bias is positive. So, we expect MCX Copper to sustain above ₹750 and see a fresh leg of the rally from there.
Trading strategy
Traders can wait for dips and go long at ₹755. Keep the stop-loss at ₹745. Trail the stop-loss up to ₹760 as soon as the contract moves up to ₹768.
Move the stop-loss further up to ₹770 when MCX Copper touches ₹775 on the upside. Exit the long positions at ₹780.
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