Copper futures (continuous contract) on the Multi-Commodity Exchange (MCX) have been tracing a sideways trend. The February contract has been oscillating between ₹763 and ₹780 for the past couple of weeks.
The sideways correction has moved the contract towards a rising trendline support, which the contract is expected to touch at around ₹770. While this is positive, the overall trend, too, remains bullish despite the consolidation.
So, in the coming days, we will most probably see copper bulls picking up momentum. The contract might rally to ₹810 -– a considerable resistance. A breach of this can take the contract to ₹825 and, possibly, to ₹840.
On the downside, a clear breach of the support at ₹763 can turn the outlook bearish. The nearest support below ₹763 is at ₹740.
Trade strategy
Based on our expectation that copper futures are likely to appreciate, we suggest going long at the current level of ₹776. Add more longs if the price dips to ₹765. Place stop-loss at ₹755.
Modify the stop-loss to ₹772, when the contract rallies above ₹790. Tighten it further to ₹788 when the price touches ₹800. Book profits at ₹810.