Copper Prices continued to fall last week in line with expectations. Copper futures contract, fell to a low of Rs 710.30/kg on Multi-Commodity Exchange (MCX) last week, has increased since then. It hit a high of Rs 728 on Friday, currently trading at Rs 716.80/kg.
The general trend is down. The recent bounce from the low ₹710.30 was significant and occurred just below the 200-day moving average support at ₹715. However, the drop from ₹728 shows inherent weakness in the contract. This holds the overall downtrend. As such, any further rise from here could see new sellers enter the market at higher levels.
Resistance in the ₹730-735 area might limit the uptrend. The contract could drop to ₹710-700 again this week. A break below ₹700 can drag the price to ₹685-680 afterwards.
To negate this bearish view, copper futures have to break through ₹735 unequivocally. In that case, the contract could breathe easier and rise to ₹750 or more. But such an upside move looks less likely.
Hold short positions executed at the average price of ₹747. The revised stop loss is now ₹740. Keep the stop loss there. Exit 50 percent of short positions at ₹710. Modify the stop loss for the remaining positions to ₹722. Exit the remaining shorts at ₹700.