Aluminium prices have been on a rise since May last year and this year too, the metal seem to be witnessing good gains. As a result, the continuous contract of aluminium on the Multi Commodity Exchange (MCX) has been producing good gains during this period.

Even though the contract witnessed consolidation phase in July and August, the major uptrend remained intact. Thus, the futures broke out of the range of ₹200 and ₹208 towards the end of August and continued its rally. Consequently, it reached ₹235 by mid-September.

Since then, it has not been able to move beyond this level, raising doubts whether the rally can sustain. But notably, the contract did not see a drop in price and is largely held between ₹222 and ₹235. There are factors that support bullish bias – the relative strength index and the moving average convergence divergence on the daily chart remain in the bullish zone and the price continues to stay above the 21-day moving average. But unless the contract breaks out of ₹235, the next leg of rally will remain doubtful. On the other hand, the bull trend will stay valid so long as ₹222 holds.

The direction of the breakout can give a hint about of the direction of the next leg of trend. Until this occurs, traders can consider implementing range trading strategy.

If the uptrend regains traction and ₹235 is breached, the contract can touch ₹245 and ₹250 whereas a break below ₹222 can drag it to ₹216 and ₹208.

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