Since March 2020, the price of copper has been steadily appreciating. As a result, the continuous contract of the metal on the Multi Commodity Exchange (MCX) has been witnessing a sustained rally. Although it overcame two corrective phases in 2020, the price action largely remained sideways where there was no dip in price.
However, by the end of February this year, the futures faced a resistance and declined from ₹732 to ₹664, losing about nine per cent within a month.
The price level of ₹660 was a strong support and the overall trend being up, the contract did not fall further.
Following a brief period of consolidation, the futures started to rally and moved above the prior high and hit a new high of ₹812.6 on Monday.
However, the price moderated below the ₹800-mark. Nevertheless, the trend is positive and as long as the support band of ₹750 and ₹768 holds, we can approach the metal with a bullish inclination.
Positive bias is affirmed by indicators like the relative strength index and the moving average convergence divergence on the daily chart as both stay in their respective bullish territory.
Moreover, the average directional index shows good strength in rally and the volume is increasing as the price moves up. These are solid signals of an uptrend. Hence, traders can initiate long positions in copper futures (May series) on dips with stop-loss at ₹750. The contract is likely to move past above ₹800 again and might touch ₹820.