The short-term outlook for the copper futures contract on the Multi Commodity Exchange (MCX) is bearish. The contract has been falling sharply since Thursday last week. The March Futures contract made a high of ₹786.6 per kg on Thursday and has come down sharply. It is currently trading at ₹748 per kg.
Outlook
The recent fall has dragged the copper contract below the key support level of ₹750. Another important resistance is at ₹760. The upside is likely to be capped at ₹760, in case if the contract breaks above ₹750.
As long as the contract trades below ₹760, the view will remain negative. A fall to ₹735-730 is likely in the next two-three weeks.
The region between ₹735 and ₹730 is a strong support zone. As such, the current fall can halt in this support zone. We expect the copper contract to bounce from this ₹735-730 support zone. Such a rise can take the contract up to ₹750-₹760 again.
Trading strategy
Traders can go short now. Accumulate shorts on a rise at ₹758. Keep the stop-loss at ₹763. Trail the stop-loss down to ₹746 as soon as the contract falls to ₹742. Move the stop-loss further down to ₹739 when the contract touches ₹736 on the downside. Exit the shorts at ₹732.
The expected rise from around ₹735-730 will keep the overall uptrend that has been in place since September last year. So, traders will have to exit the short positions at the level mentioned above.