Aluminium futures on the Multi Commodity Exchange (MCX) bounced off ₹198 last week. On Monday, it closed at ₹202.05, which has also lifted the contract above the 20-day moving average (DMA). Thus, the bullish bias is retained by aluminium futures.
Also read: Aluminium futures could see a recovery
From the current level, the nearest resistance is at ₹205, where the 50-DMA coincides. Nevertheless, we expect aluminium futures to get past this level and touch ₹210 in the near-term.
Notably, since June last year, the continuous futures of aluminium has been trading within the ₹192-210 price band. So, after rallying to ₹210, the contract could see a drop in price.
On the other hand, if aluminium futures decline from the current level itself, it can find support at ₹198 and ₹192. The next major swing in price depends on the direction of the break of the ₹192-210 range.
Trade strategy
Last week, we suggested going long on aluminium March futures at ₹198. Stop-loss was suggested at ₹190.
Retain this trade but raise the stop-loss from ₹190 to ₹198. Thereafter, when the contract rallies past ₹205, tighten the stop-loss to ₹200. Liquidate the longs at ₹210.