The copper futures contract traded on the Multi Commodity Exchange (MCX) broke below ₹750 per kg in line with our expectation. But the fall did not sustain.

The contract made a low of ₹738 last Friday and has bounced up from there. However, the broader view remains bearish. The contract made a high of ₹770 and is declining again. It is currently trading at ₹761 per kg. Strong resistance at ₹777-₹780 can cap the upside. We expect the contract to reverse lower again and fall to ₹740 and ₹730. A decisive break below ₹730 will trigger a fresh fall to ₹710-₹700 and even lower.

Hold on to the shorts we had recommended last week at ₹762. Accumulate shorts on a rise to ₹770. Retain last week’s trading strategy. Keep the stop-loss at ₹791 and trail it down to ₹748 as soon as the contract falls to ₹732. Move the stop-loss down to ₹728 as soon as the contract touches ₹721 on the downside. Book profits at ₹717. The bearish view will be negated only if the contract breaks above ₹780 decisively. Such a break will then open the doors for a fresh rally to ₹800-₹815. But that looks less likely now as the contract seems to be losing strength. Also, in the bigger picture, the strong uptrend that was in place since March 2020 seems to have made a top already. The recent fall over the last couple of months gives an early sign of a trend reversal. A strong fall below ₹700 will confirm the same.

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