The continuous contract of copper on the Multi Commodity Exchange (MCX) has rallied since March last year. Although there have been occasional corrections, the overall direction of the trend remained up. While the uptrend has continued this year, the contract, after reaching ₹740 levels in February, reversed the direction and what followed was a biggest drop in price since March 2020. That is, the contract lost nearly 12 per cent as it declined to ₹655.
But the major trend being bullish, the contract were able to regain traction and return to its upward movement. It then rallied and went past ₹740 levels and registered a new high of ₹815 a month ago. Even though the contract stayed above ₹800-mark for a couple of sessions, selling interest expanded resulting in it turning southwards. The price action since then has been exhibiting a bearish bias where the contract has formed a lower high and it has also slipped below the important level of ₹740.
Affirming the bullish bias, the relative strength index has gone below the mid-point level of 50 and the moving average convergence divergence has been charting a downward trajectory and is on the verge of slipping into the bearish territory. However, ₹730 is a support and the price is hovering around the 50-day moving average. So, taking all the factors above into considerations, traders can initiate fresh short position if the contract breaks below ₹730. While stop-loss can be at ₹760, the target can be ₹680.