The aluminium 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.