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Aluminium futures on the Multi Commodity Exchange (MCX) saw a fall in price over the past week from the resistance at ₹202, and is now hovering at ₹198.
The chart of the continuous aluminium futures shows that ₹192-194 is a support band. Also, the price action since June last year shows that it has largely been oscillating between ₹192 and ₹210.
So the next leg of trend depends on the direction of the break of the ₹192-210 price band. That said, since aluminium futures is trading near the bottom end of the range, the probability of a rally is high.
In the near term, aluminium futures could appreciate to ₹210. Resistance above ₹210 are at ₹218 and ₹226.
On the other hand, if the contract slips below ₹192, we could see a fall to ₹186 or even ₹178, which are notable support levels.
Trade strategy
Last week, we suggested going short on aluminium February futures at ₹196. Liquidate this at the current level of ₹198.
Then, one can go long on March futures at around ₹198 and on a dip to ₹196. Place stop-loss at ₹190. When the contract touches ₹204, tighten the stop-loss to ₹199. Book profits at ₹210.
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