Aluminum futures: Retain the shorts
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.
June 20, 2022