Aluminium futures on the Multi Commodity Exchange (MCX) has been on a downtrend since the final week of May, after facing a resistance at ₹250.
The June contract slipped below the support at ₹232 and the price action hints at a further decline. But since this contract is nearing expiry, traders can consider the July series for analysis and trading.
The July contract, too, has dropped below a support at ₹235. Moreover, the price is below the 20- and 50-day moving averages, which are showing a bearish crossover.
Therefore, we expect the July aluminium futures to decline in the forthcoming sessions to ₹210. The trend will turn bullish if the contract surpasses the resistance at ₹235.
Trade strategy
Last week, we recommended going short on June aluminium futures ₹230. Roll over this short to July. That is, exit June contract at the current market price and initiate fresh sell in July series now at ₹229. Add shorts if the price rises to ₹235. Place stop-loss at ₹240.
When the contract drops below ₹225, revise the stop-loss to ₹232. Bring the stop-loss further down to ₹222 when the price touches ₹215. Book profits at ₹210.