On the MCX, June copper contracts were trading at Rs 863.70 around 2 pm, down Rs 4.15 or 0.48%. On the COMEX, copper futures were at $4.74 per pound, down $0.11 or 2.26%.
On the LME, the three-month copper price was hovering around $9550.50 per metric tonne, declining by 0.72%.
The prices fell despite the dollar index (DXY) gaining by 0.24 points or 0.25% and trading at 98.95 against a basket of six major currencies. A softer dollar makes greenback-denominated assets more affordable to holders of other currencies.
“U.S. trade officials are currently reviewing the impact of U.S. copper imports on the local industry, with a report due in the next few weeks,” Reuters reported, quoting ANZ Research.
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The base metal is also finding support from improving fundamentals as copper stocks in the LME-registered warehouses on Monday dropped 45% since mid-February to 148,450 tons, the lowest in almost a year. Commenting on the action, Ajit Mishra, Senior Vice President – Research at Religare Broking, said that copper prices were holding firm amid tightening supply and robust U.S. demand. “A sharp drop in LME inventories and a growing premium between cash and futures contracts highlight physical market strain. However, a stronger U.S. dollar and uncertainty over Chinese demand capped further gains,” he added.
Technical view
Copper has given a bullish breakout on the daily chart, moving decisively above a tight consolidation range that persisted over the past several sessions, Mishra said, adding that a breakout candle on the charts exhibits strength and has closed well above the short-term moving average, indicating robust upward momentum.
“The price is also trading comfortably above the 200-day moving average, reinforcing a positive long-term trend. If this breakout sustains, copper could potentially head towards the next resistance zone near Rs 885– Rs 900 levels,” Religare Broking’s senior VP said.
What should traders do?
From a trading perspective, one can consider initiating long positions in the range of Rs 860-863, with a stop loss placed at Rs 853, Mishra said. On the upside, the price could move towards target levels of Rs 885 and Rs 895, offering a favorable risk-to-reward setup for positional traders, he added.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
