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Copper futures on the Multi Commodity Exchange (MCX) has been moving up over the last month after finding support between ₹700 and ₹710.
On Wednesday, the contract broke out of a key resistance at ₹740, turning the near-term outlook positive. Given the upward momentum, we anticipate copper futures to hit ₹785.
That said, we might see a minor dip in price, possibly to retest the resistance-turned-support of ₹740. Post this move, copper futures can establish the next leg of rally.
- Also Read: Lead futures: Buy on a breakout
In case the contract rallies past ₹755 from the current level itself, we might not witness moderation in price to ₹740.
On the other hand, if copper futures falls below ₹740, it could extend the fall to ₹725. In this scenario, the odds of the upswing to ₹785 will become significantly lower.
Trade strategy
Traders can buy copper futures if it breaks out of ₹755 from the current level. Target and stop-loss can be at ₹785 and ₹740 respectively. After initiating this trade, tighten the stop-loss to ₹765 when the contract goes up to ₹775. Liquidate the longs at ₹785.
Alternatively, instead of breaking out of ₹755, if copper futures decline from here, go long at ₹740. Place initial stop-loss at ₹720. When the contract moves above ₹755, alter the stop-loss to ₹740. Tighten the stop-loss further to ₹765 when the price rises to ₹775. Exit at ₹785.
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