Since the calendar turned June, the copper prices witnessed a sharp fall. Consequently, the copper futures on the MCX (Multi Commodity Exchange) began a fresh leg of downtrend from the resistance level of about ₹ 810. It fell over the past few weeks and breached the key supports at ₹ 745 and ₹ 732.
On Thursday, the contract began the session below the support at ₹ 732, opening the door for further weakness. At ₹ 725, the nearest support can be spotted at ₹ 710. Below this, there is a support at ₹ 690. We expect copper futures to touch ₹ 690 in a couple of months.
The contract could see a corrective rally from the current levels by moving up to ₹ 745 before dropping to ₹ 710 and then ₹ 690.
Traders can consider initiating fresh shorts at the current level of ₹ 725, and add more shorts when it rallies to ₹ 745. Place the initial stop-loss at ₹ 760. When the price declines to ₹ 710, liquidate three-fourths of the total shorts that you hold and tighten the stop-loss to ₹ 732. Liquidate the remaining shorts at ₹ 690.
Note that there are high chances for the contract to rebound from the support band of ₹ 685-690. Hence, it is prudent to exit the shorts at ₹ 690.
June 23, 2022