Copper futures traded on the Multi Commodity Exchange have tanked over 10 per cent in the past week. Weak demand for the metal due to a slowdown in China, the world’s largest consumer, is weighing on the price.
The World Bank cutting the global growth outlook for this year to 3 per cent from its earlier forecast of 3.4 per cent has intensified the selling pressure on copper. MCX copper futures fell to a low of ₹340.9/kg on Wednesday and are trading near ₹349.
Key resistances for the contract are at ₹353 and ₹359. An immediate break above these hurdles looks unlikely. Support for the contract is at ₹340, which is holding as of now.
A break below this level can drag thecontract lower to ₹330 immediately and then to ₹311 – the 50 per cent Fibonacci retracement support level.
Since the contract has dropped sharply in a very short span of time, there is a possibility of a corrective bounce to ₹353 and ₹359 in the coming days. So, short-term traders can stay on the sidelines.
However, the broader trend is down. So, traders with a medium-term perspective can initiate fresh short positions at current levels. Stop-loss can be placed at ₹362 for the target of ₹320. Intermediate rallies to the resistances at ₹353 and ₹359 can be considered to accumulate short positions.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.