Buzz Update Aluminum futures: Retain the shorts TOU

Buzz Update Aluminum futures: Retain the shorts

Aluminum futures: Retain the shorts

The aluminum futures on the Multi Commodity Exchange (MCX) witnessed a bearish trend reversal in early March after making a high of ₹ 325.4. Since then, it has been on a decline although there were a couple of corrective rallies.

The latest leg of the downward price swing began about a month ago at around ₹ 250. We have been suggesting short positions since then with a potential target of ₹ 200, a considerable support level.

Currently trading at around ₹ 214, the contract is approaching this base from where there could be a bounce. So, traders can exit the shorts when the price falls to the price band of ₹ 200-205. Maintain stop-loss at ₹ 225 for these positions.

A rally on the back of the support at ₹ 200 can take the contract to ₹ 225. A move past this level can lift it to ₹ 242 where the 50-day moving average lies currently. A breakout of ₹ 242 is less likely and the contract can start consolidating thereafter.

On the other hand, if the support at 200 is invalidated, it can turn the medium-term trend bearish and there can be a swift fall to ₹ 186, its nearest support level. Subsequent support is at 178.

Overall, our recommendation is to liquidate all the shorts when the price falls to ₹ 200. Fresh trades thereafter can be decided based on how the contract reacts to the support at ₹ 200.

Published on

June 20, 2022


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