Aluminium futures (October) on the Multi Commodity Exchange (MCX) has largely been moving in a sideways trend over the past week.
While the contract saw a decline in price in early October, the key support level restricted the fall and has helped in a mild recovery.
Currently trading at around ₹236, the nearest crucial support for aluminium futures is at ₹230, where a rising trendline coincides. Also, the price is above the 50-day moving average, which is at ₹230 now.
The price region between ₹228 and ₹230 is a demand zone. So, as long as ₹228 holds true, the broader bias will be bullish.
That said, the chart shows that aluminium futures is facing resistance at ₹245. For the bulls to regain momentum, they ought to lift the price above ₹245. In such a case, aluminium futures can rally to ₹255.
On the other hand, if the contract falls below the support at ₹230, it can extend the fall to ₹220.
Trade strategy
We had suggested buying aluminium October futures at an average price of ₹236. Hold on to this position with a stop-loss at ₹228.
Going ahead, when the contract surpasses ₹245, raise the stop-loss to ₹238. Tighten the stop-loss further to ₹245 when the price touches ₹250. Book profits at ₹255.