The continuous contract of aluminium on the Multi Commodity Exchange (MCX), which was moving sideways between ₹222 and ₹235 in the second half of September, broke out of this range in the first week of October and rallied sharply. It made a fresh high of ₹259.3 last Monday. But thereafter, the price softened and is now trading around ₹245.

Although the prices are under pressure since the beginning of this week, the overall bullish trend is intact and the drop in price appears to be a mere corrective decline and the contract has good chance to recover. However, from where the recovery will begin remains uncertain. Immediate support levels can be spotted at ₹240 i.e., the 21-day moving average (DMA) and the subsequent one at ₹235. So, the contract could gradually drop to the price band of ₹235 and ₹240 and then resume the uptrend. Also, the 38.2 per cent Fibonacci retracement level of the prior rally lies at ₹237 i.e., within the above-mentioned price band. Therefore, until aluminium futures stay above ₹235, the chance of a short-term bearish reversal looks remote.

Given the prevailing conditions, traders can consider going long at ₹240 and accumulate at ₹235. Stop-loss can be placed at ₹228. If the recovery occurs as expected, the contract can rally to ₹250, a breakout of which can lift it to ₹258. So, take partial profits at ₹250, revise the stop-loss to ₹240 and look for next target at ₹258.