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Aluminium futures contract on the Multi Commodity Exchange (MCX) fell sharply in the past week. The contract tumbled over 3 per cent breaking below the key 21-day moving average support level of Rs 155 per kg.
The contract is currently trading at Rs 152 per kg. Though there is a support at current levels at Rs 151.5, bias on the chart is bearish. A fall to R 148 or Rs 146 is likely in the coming days.
A bounce from Rs 148 or Rs 146 can trigger a corrective rally to Rs 153 or Rs 155. But if the contract breaks below Rs 146 decisively, the current fall can extend to Rs 142 in the short term.
Key resistances are at Rs 153 and Rs 155. The contract will get a breather only if it breaks above Rs 155 decisively. Such a break will then ease the downside pressure. It will increase the possibility of the contract revisiting Rs 160 or even higher levels again. But such a strong break and a rally above Rs 155 looks less likely at the moment.
Trading strategy
Traders can exit the long positions taken at Rs 155. Alternatively, fresh short positions can be initiated on bounces at Rs 153 and Rs 154. Stop-loss can be placed at Rs 156 for the target of Rs 147. Revise the stop-loss lower to Rs 151 as soon as the contract moves down to Rs 150.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading)
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