Aluminium futures on the Multi Commodity Exchange (MCX) were charting a sideways trend between February 2 and 16, largely oscillating within ₹199 and ₹202. On Monday, the contract broke below the range and closed at ₹197.45.
Since the broader trend has been bearish and the contract has formed a lower low on the daily chart, the probability of further fall is high. Although there is support at ₹192, we anticipate aluminium futures to drop to ₹186 in the near-term.
In case of a recovery, aluminium futures should surpass the barrier at ₹205 to really turn the trend bullish. If such a move occurs, we can see the contract appreciating to ₹215 or even to ₹220. Yet, as it stands, the bias is bearish.
Trading strategy
Short aluminium futures now at ₹196. Add shorts if the contract rises to ₹200. Place stop-loss at ₹204. When the price below ₹190, tighten the stop-loss to ₹195. Book profits at ₹186.