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The strong rally in the copper futures contract traded on the Multi Commodity Exchange (MCX) that begun from the low of ₹390/kg on December 1 halted this week. The contract found resistance at a high of ₹414.9 on Monday and has reversed sharply lower from there. The MCX-Copper futures contract is currently trading near ₹406.
The reversal this week is significant as it has happened from just below the 200-day moving average resistance at ₹415.25. The immediate outlook is bearish. Resistance is at ₹410. A fall to ₹401 looks likely in the coming days.
Traders with a short-term perspective can go short at current levels. Stop-loss can be placed at ₹410 for the target of ₹401. The psychological level of ₹400 will now be crucial. A strong break below this level will increase the selling pressure in the contract and drag it lower to its next important medium-term support at ₹390. It will also increase the danger of the contract declining below this significant support to ₹370 over the medium-term.
On the other hand, if the contract manages to bounce back from ₹400, then a rise to the 200-day moving average resistance is possible. The outlook will turn positive if the contract breaches this resistance decisively. Such a break can then take the MCX-Copper futures contract to ₹423 thereafter.
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