Copper futures on the Multi Commodity Exchange (MCX) has been on a decline for over two months. Before a couple of weeks, the continuous contract of copper futures dropped below the support at ₹835, adding to the bearishness.
The August expiry contract, currently trading at ₹784, has a support at ₹775. Given the current momentum, this is likely to be breached. In which case, the contract can drop to ₹745, a support. Subsequent support is at ₹700.
On the other hand, if copper futures rebound from the support at ₹775, it can go up to ₹835. A breakout of this can turn the short-term view bullish and can lift the price to ₹870.
Nevertheless, considering the prevailing price action, the likelihood for a fall is high. But since there is a support ahead, traders can wait for it to be invalidated before taking fresh short positions.
Trade strategy
Wait for now and short copper futures if it slips below the support at ₹775. Target and stop-loss can be at ₹745 and ₹790 respectively. After initiating the short, once the contract touches ₹760, revise the stop-loss to ₹772. Exit the trade at ₹745.