Commodity Calls

Commodity Call: Go short on MCX Aluminium

Gurumurthy K |BL Research Bureau | | Updated on: May 05, 2022

Book profits at ₹232

The short-term outlook is bearish for the Aluminium Futures contract traded on the Multi Commodity Exchange (MCX). The contract has beena strong downtrend since March. It made a high of ₹325.4 per kg in the first week of March and declined sharply from there. It is currently trading at ₹248. Though the contract has bounced from the low of ₹238 recently, the overall trend continues to remain up. Also, there is no sign of a reversal. As such this bounce from ₹238 will just be a corrective rise. Resistance is at ₹260. A further rise from here if seen can be capped at ₹260. A pull-back thereafter can drag the MCX Aluminium futures contract down to ₹230-₹228 in the next couple of weeks.

Traders can go short now. Accumulate shorts on a rise at ₹258. Keep the stop-loss at ₹263. Trail the stop-loss down to ₹245 as soon as the contract falls to ₹239. Move the stop-loss further down to ₹238 as soon as the contract touches ₹234. Book profits at ₹232. The MCX Aluminium will have to breach ₹260 decisively in order to ease the pressure. Such a break can take the contract up to ₹270 initially.

A further rise past ₹270 will only turn the outlook bullish completely. Also from medium-term perspective, the support at ₹230-₹228 is a strong trend support. As such the chances are high for the current downtrend to end here. A strong bounce from the ₹230-₹228 support zone could mark the beginning of a fresh leg of rally.

Published on May 05, 2022
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