Copper futures on the Multi Commodity Exchange (MCX) began its latest leg of downtrend in early September. Faced with resistance at ₹750, the continuous contract started to fall.
However, after falling to ₹700 in early October, the selling momentum dropped. With no bullish trend reversal, the contract has charted a sideways trend since early October. The price range has been ₹690-710.
The price action on the daily chart denotes that neither the bulls nor bears dominate at this juncture, as they fight it out to gain control. In short, the direction of the breach of the ₹690-710 price band will give us strong cues about the direction of the next trend.
If copper futures break out of ₹710 (a close above this on a daily basis can be a good sign), a move up towards ₹750 is possible. On the other hand, if the contract slips below ₹690 (a daily close below this support), we are likely to see a quick drop to the support band of ₹660-₹665.
Trade strategy
Since there are no strong indications of movement on either side, traders can stay out for now. Consider fresh positions along the direction of the break of the range of ₹690-₹710.