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Aluminium prices have been under pressure over the last few weeks. The Aluminium Futures contract on the Multi Commodity Exchange reached a high of ₹209.85 in early November and has come down from there. The contract made a low of ₹199.45 a couple of weeks back and has been attempting to bounce thereafter. It is currently trading at ₹201.3 per kg.
Outlook
The near-term outlook is slightly mixed for the Aluminium futures contract. There is a strong support at 199.50. That has been holding very well over the last couple of weeks. This is slightly a positive signal indicating a lack of strong sellers to drag the contract below ₹199.50.
On the other hand, resistances are at ₹204.30 – a short-term trendline and then at 206.20 – the 55-week Moving Average.
As long as the contract trades above ₹199.50, the chances are high for the MCX Aluminium Futures contract to rise to test the ₹204.30 and ₹206.20 resistances. If the contract breaks above ₹206.20, the up move can gain strength. In that case, an extended rise to ₹209 is possible.
The outlook for the Aluminium Futures contract will turn negative only if it breaks below ₹199.50. Such a break can drag the contract down to ₹195 and even lower going forward.
Trade Strategy
Traders can wait for dips. Go long at ₹200.50 and ₹199.80. Keep a stop-loss at ₹198. Trail the stop-loss up to ₹201.50 as soon as the contract moves up to ₹202.50. Move the stop-loss further up to ₹203 when the price touches ₹204. Exit the long positions at ₹205.50.
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