Aluminium futures on the Multi Commodity Exchange (MCX) lost 2.9 per cent last week as it closed at ₹205.75 on Friday. This was in line with our expectations. That said, further decline from the current level is less likely since ₹206 is a strong support.
The 20-day moving average currently lies at ₹205.60, denoting that the region around ₹206 is a support. The trend will turn bearish only if the contract decisively falls below ₹204. Therefore, the price band of ₹204-206 can be viewed as a support band.
We anticipate a recovery in the upcoming sessions where aluminium futures could appreciate to ₹215, a resistance. Subsequent barrier is at ₹225. On the other hand, support below ₹204 can be seen at ₹200 and ₹195.
Trade strategy
When aluminium futures was trading at around ₹210 last week, we suggested waiting for the price to decline to ₹206 before initiating fresh long positions.
Traders can now go long as the contract has seen a dip. Place stop-loss at ₹202. When the contract rallies to ₹212, tighten the stop-loss to ₹208. Book profits at ₹215.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.