Commodities

Commodity call: Aluminium to resume downtrend

The aluminium futures on the Multi Commodity Exchange (MCX) (₹248) bounced off a key support at ₹225 last week, in line with our expectation. However, the overall trend is still bearish and a decisive breakout of ₹260 can probably change the near-term outlook positive.

Also, note that ₹252 is a resistance and there is a good chance for the contract to resume the downward movement anywhere within the price band of ₹252-260.

Should it start falling again as we forecast, it could invalidate the support at ₹225 this time and the contract could even drop towards the crucial level of ₹200. But this is a strong support where it is highly likely that aluminium futures could establish a fresh medium-term uptrend where it might appreciate to retest ₹250 levels.

Given that the probability of fall from the price band of ₹252-260 is high, we suggest traders can consider initiating fresh short positions. Currently the contract is at around ₹248. Wait for it appreciate to ₹252 and then go short at that level. Initial stop-loss can be placed at ₹268. Once the price drops below ₹225, revise the stop-loss down to ₹245.

Further, tighten it to ₹230 when the futures drop below ₹210. Liquidate all the shorts at ₹205. Thereafter, fresh trades can be decided based on how the contract reacts to the support at ₹200.

Published on

May 23, 2022

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button
SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.