Aluminium prices have recovered sharply last week. The Aluminium Futures contract on the Multi Commodity Exchange (MCX) made a low of ₹193.20 per kg on Wednesday and then rose back sharply recovering all the loss. The contract surged to a high of ₹204.70 before closing the week at 202.85 on Friday. It is currently trading at ₹202.90 per kg.
Last week we had said that ₹201 will be a strong resistance and a fall to ₹189 was possible. That view had gone wrong.
The outlook has turned positive now. Support will now be in the ₹201-₹200 region. As long as the Aluminium contract trades above ₹200, the outlook will remain bullish. As such, a rise to ₹208-₹209 looks possible in a week or two. A break above ₹209 can take it further up to ₹210-₹211 in the coming weeks.
This bullish outlook will go wrong only if the contract breaks below ₹200. Such a break can it down to ₹197-₹196 again and even lower.
We see high chances for the Aluminium contract to sustain above ₹200 and rise to ₹209-₹210.
The stop-loss at ₹202 on the short positions recommended last week has got hit.
Traders can wait for dips. Go long at ₹201.50 and ₹200.50. Keep the stop-loss at ₹198. Trail the stop-loss up to ₹202 as soon as the contract moves upto ₹203.50. Move the stop-loss further up to ₹204 when the price touches ₹205.50. Exit the long positions at ₹207.