Aluminium futures on the Multi Commodity Exchange (MCX) witnessed a sideways movement through October. Particularly in the second half of the month, the contract was tracing a narrow horizontal trend.

The November expiry aluminium futures has been stuck within the price band of ₹238-244 since mid-October. There is also a broader range of ₹234-246 within which the contract has been oscillating for little over a month.

Ideally, the next leg of trend depends on along which direction aluminium futures comes out of the range of ₹234-246.

But note that the trend prior to the current consolidation phase has been bullish, which began in August last year. Therefore, as it stands, the probability for aluminium futures surpassing the resistance at ₹246 and establishing another leg of uptrend is high.

A breakout of ₹246 can lift the contract to ₹255. However, if aluminium futures break below the support at ₹234, the outlook can turn bearish. In such a scenario, the contract can drop to ₹220, a notable support.

Trade strategy

Buy aluminium futures now at ₹241 and add longs if the price dips to ₹236. Place initial stop-loss at ₹232. When the contract breaks out of ₹246, trail the stop-loss to ₹242. Book profits at ₹250.

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