Copper prices have been on a corrective fall over the last few weeks. The copper futures contract on Comex made a peak of $3.16 per pound in the first week of September and has come-off sharply from there.

However, it made a low of $2.90 and has recovered from there to trade at $2.96 per pound.

On the domestic front, the copper futures contract on the Multi Commodity Exchange (MCX) made a high of ₹451.35 per kg last month and has come-off from there.

But, the contract has bounced after making a low of ₹417.3 and is currently trading at ₹430. Charts indicate that copper might either consolidate sideways or dip further before resuming its overall uptrend.

Outlook

The Comex-Copper contract has a key resistance at $3. A strong break above this hurdle is needed for it to gain momentum. Such a break will increase the likelihood of the contract targeting $3.20.

But, as long as it trades below $3 a fall to test the key short-term support at $2.88 cannot be ruled out.

A bounce from there can keep the contract range-bound between $2.88 and $3 for sometime. But if the contract declines decisively below $2.88, it can fall to $2.77 over the medium term. The level of $2.77 is a key long-term support level and is also the neckline of the inverted head and shoulders pattern. As such, a break below $2.77 is unlikely.

A strong bounce from this support will signal the resumption of the overall uptrend in the contract that has been in place since October 2016.

On the domestic front, the MCX Copper futures contract has a resistance near ₹435-437 region.

As long as it trades below this resistance, a fall to ₹412 or ₹410 cannot be ruled out. The region at around ₹410 is a strong long-term support and a break below it is unlikely.

An eventual upward reversal from ₹410 will indicate that the uptrend since October 2016 is intact and also signal the beginning of a fresh leg of upmove. A fresh rally to revisit ₹450 levels is possible thereafter.

A strong break above ₹450 will pave way for the next targets of ₹470 and ₹475.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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