Copper futures on the Multi Commodity Exchange (MCX) has been steadily gaining since mid-February. It established a rally on the back of support at ₹700.

The May copper futures broke out of the resistance at ₹800 a month ago and it surpassed another hurdle at ₹840 a couple of weeks ago. But after hitting one-year high of ₹876.5 last week, the prices moderated.

The price action shows that the contract is now trading around ₹855. The overall uptrend remains valid and there is a chance for copper futures to recover and touch ₹880 in the short-term. But before that it might see a corrective dip to ₹840.

Note that the price band of ₹830-840 is a support. A breach of these levels can turn the near-term outlook bearish where the price can decline to ₹800. Nevertheless, as it stands, we expect the trajectory to be like the following—the price will dip to ₹840 and then see an upswing in price to ₹880.

Trade strategy

Stay on the fence for now. Go long on copper futures if the price falls to ₹840. Place initial stop-loss at ₹825. When the contract crosses over ₹860 after the long order is initiated, tighten the stop-loss to ₹848. Books profits at ₹878.