Copper prices have been falling since the beginning of this month. The copper futures contract traded on the Multi Commodity Exchange (MCX) has declined about 2 per cent from its high of around ₹732 per kg. It is now trading at ₹717 per kg.
Outlook
The recent fall proceeded from just below a key long-term trendline resistance. That leaves the outlook bearish for the MCX copper futures contract. Immediate support is at ₹712.50. Whether the contract sustains above this support or not will determine the next leg of move for the short-term.
A bounce from this support can take the copper futures contract up to ₹721. A further rise above ₹721 could be difficult.
A break below ₹712.50 will increase the downside pressure. Such a break can drag the contract down to ₹700-695 initially. A further break below ₹695 will drag the copper futures contract down to ₹685.
We project the copper futures contract to sustain below ₹721 and fall to ₹695-685 in the coming weeks.
Trade strategy
Traders can go short on a break below ₹712.50. Keep stop-loss at ₹718. Trail the stop-loss down to ₹709 as soon as the contract falls to ₹706. Move the stop-loss further down to ₹704 when the contract touches ₹701. Exit the shorts at ₹698.