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Until last week, since the beginning of 2021, the February futures contract of aluminium on the Multi Commodity Exchange (MCX) has been caught in ranges. It was rangebound between ₹160 and ₹164 for most part of this period.
Though the price slipped below both 21- and 50-day moving averages (DMA), the support at ₹160 has been strong and prevented depreciation below this level. But the up-move that began in the first week of the current month was strong enough to take the contract out of the trading range with decent volume.
In support of the positive view, the daily relative strength index has moved above the midpoint level of 50 and the moving average convergence divergence indicator on the daily chart is charting an upward trajectory. Also, the price is now above both 21- and 50-DMAs and the average directional index is denoting strong uptrend.
Globally, the price of the metal seems to exhibit positive bias as indicated by the three-month rolling forward contract on the LME, which has now rallied past the resistance at $2,050 and looks set to go up.
Traders can initiate fresh long positions with stop-loss at ₹163.50. The contract can move up and touch ₹170 initially, a breach of which can lift it towards ₹174.
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