The aluminium futures (continuous contract) on the MCX (Multi Commodity Exchange), after touching a high of ₹325.4 in March this year, has been moving downwards. It made a low of ₹202.25 about three weeks before, thereby losing about 39 per cent from its prior peak of ₹325.4.

But the bears seem to have lost momentum and as a result, the contract has largely been fluctuating in the range of ₹200-215. While this cannot assure a bullish trend reversal, the next leg of short-term trend depends on the direction of the break of this range ₹200-215. Nevertheless, prolonged consolidation means bulls might make their moves that can lift the contract prices, at least in the short-term.

If the contract falls below the support at ₹200, it can decline to ₹187 and possibly to ₹160 which are the nearest supports. On the other hand, if the aluminium futures break out of the resistance at ₹215, it can rally to ₹235, which can be a hurdle for the bulls. A breach of this can lift the contract to ₹250-254 range – a resistance band. But a rally beyond this price band is less likely.

So, traders can stay on the sidelines for now and consider initiating fresh shorts if the support at ₹200 is breached. Or short if aluminium futures rallies to ₹235 and to ₹250 i.e., split the entries to two legs and initiate one leg of short at ₹235 and another leg at ₹250 so that the average short price would be around ₹243.