Commodity Calls

Go short on MCX Aluminium

Gurumurthy K | | Updated on: Jun 13, 2022


The sharp and consecutive fall over the last three weeks strengthens the down move

The Aluminium futures contract traded on Multi Commodity Exchange has been on a strong downtrend since March this year with intermediate corrections. The contract made a high of ₹325.4 per kg in March this year and has tumbled over 31 per cent from there. It is currently trading at ₹224 per kg.

The sharp and consecutive fall over the last three weeks strengthens the down move. It also indicates the beginning of a fresh leg of down move within the overall downtrend. Immediate support is at ₹223.

The chances are high for the contract to break this support and extend the fall. Such a break can drag it to ₹200 in the coming weeks. Resistance is in the ₹232-233 region. In case the contract manages to hold above ₹223 for now and bounces back, the upside can be capped at ₹233.

A break above ₹233 looks less likely. Traders can go short now and accumulate at ₹229 in case a bounce is seen. Stop-loss can be placed at ₹236. Trail the stop-loss down to ₹219 as soon as the contract falls to ₹213. Move the stop-loss further down to ₹210 as soon as the contract touches ₹207 on the downside. Book profits at ₹203.

From a medium-term perspective, the region around ₹200 is a good support zone. As such the current fall is likely to halt around ₹200 and a bounce-back move is possible. So, traders going short should look to exit at the level mentioned above. 

Published on June 13, 2022
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