Copper futures on the Multi Commodity Exchange (MCX) has witnessed a sharp fall over the past few sessions. It fell off the resistance at ₹740 more than a week ago and the contract slipped below a support at ₹720 last Friday. It also declined below a rising trendline support last week.
This has increased the odds of further fall in price, likely to the support band of ₹695-700 in the coming sessions. That said, the copper futures, currently trading at around ₹712, might retest the support-turned-resistance level of ₹720 before touching ₹700.
On the other hand, if the contract recovers and rallies past ₹720, the bias might change positive, leading to a possible upswing to ₹740, a resistance. However, as it stands, the chances for such a rally is slim.
Trade strategy
Short copper futures now at ₹712 and add more shorts in case the price moves up to ₹718. Place initial stop-loss at ₹724.
When the contract falls to ₹700, exit half of the shorts and tighten the stop-loss to ₹710 for the remaining positions. Exit the balance at ₹695.