Copper futures on the Multi Commodity Exchange (MCX) has been on a recovery ever since it took support at ₹700 in the final week of May. The rally extended in the following weeks and the contract broke out of a key resistance at ₹730 on Wednesday. Thus, the short-term outlook has turned positive.
Currently the June futures of copper is trading at ₹728 after it made a five-week high of ₹732.45 on Wednesday. There is a chance for the price to soften further to ₹725. However, we expect copper futures to eventually resume the upswing and move up to ₹750.
On the other hand, if the contract falls below ₹725, it is expected to find a rising trendline support at ₹723. A drop below this trendline can attract fresh sellers, leading to a sharp fall in price, possibly to ₹710 or even ₹700.
Nevertheless, as it stands, copper futures is trading with a bullish bias as it has invalidated the resistance at ₹730.
Trade strategy
One can buy copper futures at the current level of ₹728. Add more longs in case the price dips to ₹725. Place initial stop-loss at ₹718.
When the contract rallies past ₹738, modify the stop-loss to ₹730. When the contract touches ₹745, tighten the stop-loss further to ₹738. Book profits at ₹750.