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The continuous futures of copper on the MCX (Multi Commodity Exchange) has been on a rally since the past month. After taking support at ₹600, the contract has appreciated to the current level of ₹660 after touch a high of ₹684.3 last week.
The chart indicates resistance between ₹670-700. The 50-day moving average (DMA) lies within these levels, making it a considerable resistance band. Therefore, the likelihood of a decline from here is high given the overall bearish trend. In case the copper futures rally from here, it can be capped at ₹700.
If the contract resumes its downtrend from the current levels, it will most probably fall below ₹600 and touch ₹585, a support level. Subsequent support is at ₹550.
Considering these factors, initiate fresh short positions in two legs. That is, go short at the current level of ₹660, and add more shorts when the contract rallies to ₹700. Place initial stop-loss at ₹745. Once the contract slips below ₹600, tighten the stop-loss to ₹670. Revise it further down to ₹615 when the price falls below ₹585. Exit all the shorts at ₹550.
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