Commodity Calls

MCX-Copper is in a strong uptrend

Gurumurthy K BL Research Bureau | Updated on January 09, 2018

copper

Copper prices have gathered momentum over the last few weeks. The metal has been on a strong uptrend since June. This uptrend has gathered momentum from the last week of July. The COMEX-Copper futures contract surged 3 per cent last week breaking above a key psychological hurdle of $3 per pound. The contract has extended the upmove in this week as well and is currently trading at around $3.06 per pound. On the domestic front, the Copper futures contract on the Multi Commodity Exchange (MCX) has surged over 6 per cent since the first week of this month breaking above a key resistance level of ₹415 . The MCX-Copper is currently trading at ₹434 a kg. Reports on improving demand from China coupled with a weak dollar has taken the metal prices sharply higher over this period.

Outlook

Copper has been on a strong uptrend since late October 2016. This uptrend is intact. The COMEX-Copper has a key support in the $3.0-$2.99 zone. As long as it trades above this support, further rally to $3.25 or even to $3.30 is likely in the coming weeks. The region around $3.3 is the next significant resistance. A corrective fall from $3.30 targeting $3.15 or even $3.0 cannot be ruled out thereafter. On the other hand, the near-term view may turn negative if the contract fails to sustain above $2.99 in the coming days. A fall below $2.99 can pull the prices lower to $2.95 or $2.93.

On the domestic front, the MCX-Copper futures contract has risen breaking above the 61.8 per cent Fibonacci retracement level of ₹428 this week. While the contract sustains above this support, the rally can extend to ₹445 or ₹450 in the coming weeks. The region between ₹445 and ₹450 is the next significant resistance for the contract. A pull-back from this resistance region can drag the contract lower to ₹425 or ₹420.

The region between ₹415 and ₹410 is a key resistance-turned-support zone for the MCX-Copper contract. Only a strong fall below ₹410 will turn the outlook negative. But such a sharp fall looks unlikely at the moment.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

Published on August 29, 2017

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