Aluminium futures on the Multi Commodity Exchange (MCX), over the past three weeks, has been on a decline. It started falling on the back of the barrier at ₹250.
In the last three weeks, aluminium futures has slipped below key support points. The contract is now below both the 20- and 50-day moving average, and early this week it dropped below a key support at ₹232.
These factors point to a possible downward movement from the current level. But there could be a minor rally from here, which can be capped at ₹235.
As per the chart, the nearest support for aluminium futures from the current level is at ₹225. But given the momentum, the contract will most likely fall below this and touch ₹210 in the short-term.
Aluminium futures can turn the trend bullish only if it can recover above ₹240, which at the moment appears unlikely. So, traders can consider short positions.
Trade strategy
Short aluminium futures now at ₹230 and 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.