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The MCX-Aluminium futures contract on the Multi Commodity Exchange (MCX) has declined about a per cent on Monday and has dragged it below a crucial support level of ₹121.6 a kg. The contract had made an intraday low of ₹120.6 and has bounced slightly from there to trade at around ₹121.
A decisive daily close below ₹121.6 would bring the contract under pressure. Such a break will increase the likelihood of the contract extending its fall ₹119 or ₹118.7. Further break below ₹118.7 will enhance the possibility of the contract tumbling to ₹117.5- the 200-day moving average support.
On the other hand, if the contract manages to reverse higher and sustain above ₹121.6, the downside pressure may ease. But only a decisive rise past ₹122 will wipe-out the downside threat completely.
Such a break can take the contract higher to ₹125 and ₹126 levels once again. However, such a strong bounce in the contract looks less probable as the daily chart reflects bearish bias.
As such a fall to ₹119 or even lower is more likely to be seen in the coming days. Short-term traders with a high-risk appetite can go short. Stop-loss can be placed at ₹123 for the target of ₹118. Revise the stop-loss lower to ₹120.5 as soon as the contract moves down to ₹119.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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