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BL Research Bureau
The continuous aluminium contract on the Multi Commodity Exchange (MCX) has been moving up over the past week. Last week, it broke out of the resistance at ₹217, turning the outlook positive. On the back of this, we had recommended fresh long positions on January expiry a week back. We advised to go long around ₹226 and accumulate on a dip to ₹220 with stop-loss at ₹214. While the contract made a high of ₹229.25 last Friday, the contract has now moderated to ₹225 level. Nevertheless, one can continue to retain the longs as the outlook remains bullish. The price decline that the contract witnessed over the past couple of sessions is probably corrective.
Substantiating the positive outlook, RSI and MACD are bullish. The total number of outstanding open interest (OI) of all active futures contract has gone up i.e., on Tuesday, it stood at 3,495 contracts compared to 2,283 contracts by the end of November. The contract has gained nearly 6 per cent his month. An increase in price accompanied by the rise in OIs indicate a long build-up. So, the above factors indicate further rally in aluminium futures in the coming sessions.
So, traders who already hold longs and continue to hold. Fresh buys can also be made at the current level. One can also accumulate if the price softens to ₹220. As recommended earlier, maintain stop-loss at ₹214. When the contract touches ₹238, liquidate half of your longs. Then shift the stop-loss to ₹228 and exit the remaining at ₹250.
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