Copper price tumbled last week in line with our expectation before recovering. The Copper Futures (May) Contract on the Multi Commodity Exchange (MCX) fell to a low of ₹688.50 per kg on Thursday. Thereafter, it has recovered well and is currently trading around ₹703 per kg. We had expected a fall to ₹685 on a break below ₹700. Our targets of ₹710 and ₹700 on the short positions taken at ₹747 has been hit. Since the May month contract will be expiring tomorrow, we will see below the outlook for the June month contract. It is currently trading at ₹709 per kg.
The Copper June Futures contract has a strong resistance at ₹717. A trendline and the 200-Day Moving Average resistances are poised around this level. Failure to breach ₹717 decisively can take the contract down to ₹700 again this week. A break below ₹700 will increase the downside pressure. Such a break can drag it down to ₹680.
On the other hand, a strong rise past ₹717 is needed to gain bullish momentum. Only in that case, a rise to ₹725-730 will come into picture.
For now, we expect the resistance at ₹717 to hold and drag the contract down to ₹700 first. Thereafter, the price action will need a close watch to see whether a bounce is happening or not.
Traders with high-risk appetite can go short on the Copper June Futures contract now. Accumulate on a rise at ₹715. Keep the stop-loss at ₹718. Trail the stop-loss down to ₹707 as soon as the contract falls to ₹705. Move the stop-loss further down to ₹706 when the price touches ₹704. Exit the shorts at ₹702.