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The Aluminium futures contract on the Multi Commodity Exchange spiked to a high of ₹122.6 a kg on June 20. However, the contract failed to sustain higher and had come-off sharply from there. It has fallen over 2 per cent from this high and is currently trading at ₹119.8 . Crucial support for the contract is poised in the zone between ₹119.5 and ₹119.3. Whether the contract reverses higher from this support zone or not will decide the next move.
A strong upward reversal from the ₹119.5-₹119.3 support zone may ease the downside pressure. It will signal that the channel pattern that has been in place since March last year is intact. A rise to ₹122 or ₹123 is possible in the short term. It will also keep the possibility of the contract rallying to ₹126 levels over the medium term. Short-term traders can go long on a reversal from the ₹119.5-₹119.3 support zone. Stop-loss can be placed at ₹118.5 for the target of ₹122. Revise the stop-loss higher to ₹120 as soon as the contract moves up to ₹121.
On the other hand, if the contract declines decisively below ₹119.3 in the coming days, the downside pressure may increase. Such a break will increase the likelihood of the contract extending its fall to ₹117 thereafter.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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