On the Multi Commodity Exchange (MCX), Aluminium futures has been moving in a tight range of ₹200-204 for the past couple of weeks. While this has been the narrow range for the contract, it has been held within a broader ₹196-204 range since July.
The contract is currently testing the resistance at ₹204. If aluminium futures falls below this level, it can decline to ₹200, where the 200-day moving average lies. A breach of this level can drag the contract to the range bottom of ₹196.
If the support at ₹196 is breached, it can establish the next leg of downtrend which can drag the contract to ₹186 or even to ₹180. On the other hand, if the contract breaks out of ₹204, it can appreciate to ₹215.
Trade strategy
On September 18, we recommended initiating short positions at an average price of ₹203 with a stop-loss at ₹206. Retain this trade. When the contract touches ₹198, adjust the stop-loss to ₹201. Book profits at ₹196.