Aluminium futures (October) on the Multi Commodity Exchange (MCX) has been on a rally over the past three months. It bounced off the support at ₹218.
The contract rose above both 20- and 50-day moving averages by mid-September, a positive indication.
However, the aluminium futures faced a barrier at ₹235. While it did not see a bearish reversal, the contract was oscillating within ₹230 and ₹235.
Last week, it broke out ₹235, hinting that the bulls have regained traction. From the current level, aluminium futures is likely to scale further heights.
The nearest barrier from the current level is at ₹250. Subsequent barrier is at ₹255.
In case the contract declines from the current level, it can find support between ₹230 and ₹235. Nearest support below ₹230 is at ₹225, its 50-day moving average.
Trade strategy
Buy aluminium October futures now at ₹238 and accumulate if the price dips to ₹233. Place initial stop-loss at ₹228 at first.
When the contract touches ₹245, trail the stop-loss to ₹238. Tighten the stop-loss further to ₹245 when the price touches ₹250. Book profits at ₹255.