The price of copper has been rising since the beginning of November. Consequently, the continuous futures of copper on the Multi Commodity Exchange (MCX) rallied from ₹660 on October 31 to ₹696.5 on November 14. Note that the contract made a high of ₹707.3 on Monday.
Along with an increase in price of copper futures, the cumulative Open Interest (OI) on the MCX increased from 6,390 contracts to 7,013 in the last couple of weeks. This indicates fresh build-up of longs. Although there was a minor long unwinding on Monday, the price action looks bullish and there are no definite signs of a bearish reversal. Nevertheless, traders should be wary of ₹700, which can resist the bulls in lifting the price up.
The nearest resistance above ₹700 is at ₹720 with subsequent one at ₹750. On the downside, ₹685 and ₹670 are notable supports.
Trade strategy
Last week, we suggested buying MCX copper futures at around ₹670. The revised stop-loss for the same would be at ₹678. At ₹700, we recommended liquidating three-fourth of the longs and carrying the remaining to a target of ₹718. Traders who followed this can continue holding the longs. However, tighten the stop-loss further to ₹690. Exit at ₹718.
One can even consider fresh longs at the current level of ₹700 with stop-loss at ₹690. Liquidate the buys at ₹718.