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Copper futures on the Multi Commodity Exchange (MCX) was oscillating in a sideways price band between January 10 and January 23. That is, the February futures was trading between ₹720 and ₹725.
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It then broke out of ₹725 last week. This did not turn the outlook bullish since there was another resistance at ₹730, where the 50-day moving average lies.
Notably, copper futures surpassed this level this week as it closed at ₹732 on Monday. This has increased the odds of the contract appreciating further.
According to the chart, the nearest resistance levels can be seen at ₹740 and ₹745. We expect copper futures to touch these levels in the near-term.
On the other hand, if the contract slips below ₹725, it can turn the outlook bearish. In such a case, copper futures could fall beyond ₹720 and decline to ₹700.
Trade strategy
As copper futures closed above ₹730 on Monday, the chart set up now favours the bulls.
So, traders can go long on the February contract now at ₹731. Add longs if the price dips to ₹726. Place stop-loss at ₹723.
Tighten the stop-loss to ₹735, when the contract touches ₹740. Liquidate the longs at ₹745.
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