Copper futures (₹1,315/kg) has been on a decline over the past week. While the broader uptrend remains valid, there are signs of a corrective decline at the current juncture.
The June futures, after failing to rally above ₹1,385 last week, reversed the path and is on a decline. On Wednesday, the contract slipped below the support at ₹1,325, where the 23.6 per cent Fibonacci retracement of the previous upswing coincides.
The breakdown below the support at ₹1,325 has opened the door for further decline. While it may be too early to call the dips a bearish trend reversal, we will most likely see the price dropping to ₹1,265. Support below ₹1,265 is at ₹1,230.
On the other hand, if copper futures resumes the rally, it ought to reclaim ₹1,325 for the bulls to gain traction. If this occurs, the contract can extend the rally to ₹1,385.
Overall, as it stands, the near-term outlook is weak and so, traders can consider selling.
Trade strategy
Short copper futures (Jun) at ₹1,325. Target and stop-loss can be ₹1,275 and ₹1,350, respectively.