The Aluminium futures contract traded on the Multi Commodity Exchange (MCX) declined sharply last week.
It made a high of ₹212 per kg on Monday last week and fell to a low of ₹204.80. It has bounced back from there and is trading at ₹207.10 per kg.
Outlook
The immediate outlook for this week is a little unclear. Immediate Support is at ₹205.20 – the 21-Day Moving Average (DMA). Resistance is at ₹207.8 – the 200-DMA. A breakout on either side of these levels will determine the next move.
For now, it looks like the contract is attempting to rise. A sustained break above ₹207.8 can take the contract up to ₹210-₹211 initially.
An eventual break above ₹211 will then strengthen the bullish momentum. Such a break can take the price further higher toward ₹215-217 and even higher going forward.
On the other hand, if the contract breaks below ₹205.20, it can come under pressure in the near term.
In that case, we can see a test of ₹201-₹200 — a crucial support zone. The contract has to hold above ₹200 to avoid a steeper fall to ₹195. So, in case a fall to ₹201-200 is seen, then the price action thereafter will need a close watch.
For now, we will have to wait and watch for a breakout on either side of ₹205.20-207.80 to get a cue on the next direction of move.
- Also read: Copper futures testing a resistance
Trade strategy
The overall outlook is positive as long as the Aluminium contract trades above ₹200.
So we suggest continuing to hold the long positions taken at ₹206. Retain the same strategy. Keep the stop-loss at ₹200. Revise the stop-loss up to ₹210 when the price touches ₹215. Book profits at ₹228.