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MCX-Aluminium (₹140.5)
The July futures contract of Aluminium in Multi Commodity Exchange (MCX) has been rallying for the past two weeks after taking support at ₹135. Consequently, it has crossed over the resistance at ₹140 on Monday, opening the door for further strengthening. Also, the price is above the 21-day moving average (DMA) and so the short-term outlook is positive for the contract.
Following the rally in contract, the indicators are inclined to uptrend. The daily Relative Strength Index (RSI) is showing a fresh uptick and is above the midpoint level of 50. The Moving Average Convergence Divergence (MACD) indicator in the daily chart, which remains in the bullish region, is turning its trajectory upwards.
Because of the above reasons, the contract looks bullish and if the contract can sustain above the key level of ₹140, the price might rally to ₹145. Above this level, it might advance to ₹150. On the other hand, if the contract gives up the gains and declines, the immediate support can be the 21-DMA at ₹138. A break below ₹138 can drag the contract to ₹135. Importantly, if price slips below this level, the medium-term trend could turn bearish.
On the global front, the price of three-month rolling forward contract of primary aluminium in London Metal Exchange (LME), which has been largely consolidating since mid-June, breached the resistance i.e. its previous high of $1,640. Thus, the trend has turned bullish and the rally might positively influence the contract in MCX.
Trade strategy
The recent rally in the contract in MCX has taken the price above the important level of ₹140. Also, globally the trend looks positive as indicated by the contract in LME, which has made a fresh high. But for confirmation, the MCX-Aluminium contract should close above ₹140. Considering these factors, traders can initiate fresh long positions if the contract decisively breaks out of ₹140. Stop-loss can be at ₹136.
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