The outlook for the Copper futures contract traded on the Multi Commodity Exchange (MCX) is bearish. The bounce from the July low of ₹601 per kg halted at ₹684 in mid-August and the prices declined thereafter. This indicates that the overall downtrend that has been in place since March is intact. Indicators are also showing a bearish signal. Also, the 21-Week Moving Average (WMA) has fallen below the 100-WMA.

The contract is currently trading at ₹628 per kg. Resistance is at ₹645 and then at ₹660. Any intermediate bounce can be capped either at ₹645 or at ₹660. There is room for a fall to ₹600 in the near-term. A corrective rally from ₹600 to ₹620-625 is a possibility. However, the overall picture will continue to remain weak, and the contract is likely reverse lower again from the ₹620-₹625 region. An eventual break below ₹600 will see the fall extending to ₹575 in the coming weeks.

Trading Strategy

Traders can go short at current levels in the MCX Copper futures contract. Accumulate shorts on a rise at ₹640. Keep the stop-loss at ₹665. Trail the stop-loss down to ₹618 as soon as the contract falls to ₹608. Move the stop-loss further down to ₹605 when the contract touches ₹595 on the downside. Book profits at ₹580.

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