Aluminium prices tumbled last week. The Aluminium future contract on the Multi Commodity Exchange (MCX) fell sharply more than 4 per cent last week. That fall has taken the contract well below the psychological level of ₹200 per kg for the first time since November last year. The contract made a low of ₹195.3 and has bounced slightly from there. The June Futures contract is currently ₹195.90 per kg.
Outlook
The Aluminium Futures contract was broadly range bound between ₹200 and ₹215 since March. Last week’s sharp fall has broken this range on the downside and dragged it lower. This has turned the outlook bearish now. Resistances are now at ₹200 and ₹202, which can cap the upside. Any bounce from current levels is likely to get fresh sellers around ₹200-202.t
The contract can fall to ₹188-187 from current levels in a week or two. This ₹188-187 is an important support zone. A trend line as well as the 200-Week Moving Average (WMA) are poised in this ₹188-187 region. This makes it strong support zone. As such, the chances are high for the contract reverse higher again from here eventually.
Trade Strategy
Traders can go short at current levels. Accumulate shorts on a rise at ₹200. Keep the stop-loss at ₹203. Trail the stop-loss to ₹194 as soon as the contract falls to ₹191. Move the stop-loss further down to ₹191 when the contract touches ₹189. Exit the shorts at ₹188.