The price pattern of Copper over the past 3-4 sessions of trade is taking shape of a bearish head
and shoulder pattern on the intraday charts.
The formation of this price pattern is a sign of distribution and signals that the future price action of an index/stock/commodity will trade with a negative bias.
The neckline support for the said pattern is placed at the Rs 431.25 levels. A sustained break below the Rs 431.25 levels will see the prices of Copper heading down towards the Rs 428 / Rs 425 levels.
Another key observation to be made is that the recent rally towards the Rs 438.40 levels was met by a negative divergence by the RSI indicator, as a result of which the prices did not sustain at higher levels and thus slipped below its key moving averages.
We recommend traders to sell 50% at current levels and again on rallies to Rs 437.25--Rs 438.40 levels with a stop loss placed above 441.60 levels for downside targets of Rs 428 / Rs 425 levels.
MCX COPPER AUG CONTRACT OPEN Rs 436.80 HIGH Rs 436.80 LOW Rs 432.65 CLOSE Rs 434.60.
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