From December last year until the end of January 2021, copper futures traded within a price band — the price did not trend and remained sluggish. The March futures contract on the Multi Commodity Exchange (MCX) oscillatied between ₹585 and ₹620. But the rally that began in early February, from the base of ₹585, was strong enough to take the contract out of the consolidation range, resulting in a breakout of ₹620.
What followed was a sharp rally which led the futures to mark a new high of ₹737 by February-end. However, over the past few trading sessions, as bears gained strength, the price slipped below the ₹700-mark and went below the key support of ₹690 on Thursday. Apparently, this has turned the near-term outlook for the contract negative. Indicators like the RSI and the MACD on the daily chart, although staying in their respective bullish territory, are showing bears had gain good ground over the past week.
However, currently hovering around ₹670 levels, the contract has its 21-day moving average (DMA) support at ₹660. The 50 per cent Fibonacci retracement level of the prior rally overlaps at this price level, making it a substantial support. So, unless the price decisively breaks below the support of ₹660, the likelihood of bulls making a comeback cannot be rejected.
Traders can now stay away and short copper futures if it invalidates the support at ₹660.