Aluminium futures breach a support

Aluminium futures (₹346/kg), since early June, has been on a decline. Over the past week, it has breached a couple of important supports, and the outlook is bearish now.

Since June futures are nearing expiry (June 30), we shall consider the July contract for analysis and trade recommendation.

The July contract slipped below the support at ₹360 last week. While it has been charting a sideways trend post the breakdown, on Tuesday, the contract breached another support at ₹350.

The price action indicates that the downward momentum is strong and the nearest notable support is at ₹330. Hence, the likelihood of a further decline is high.

On the other hand, if aluminium futures reclaim ₹360, it can extend the rise to ₹375. However, given the bearish price action, a rally is unlikely to occur.

Last week, we suggested going short on the June contract if it slips below ₹350. Traders who initiated this trade can retain with stop-loss at ₹360. Exit at ₹330. In case neither target nor stop-loss is triggered before expiry (June 30), consider exiting at the prevailing price.

Traders looking for new opportunities can sell July futures at ₹350. Target and stop-loss can be similar to the above, i.e., ₹330 and ₹360, respectively.