Aluminium futures is currently trading at ₹245.50/kg. The contract began the current week on a strong note as it rallied past the resistance at ₹248 and marked a high of ₹250 on Monday.
However, there was no follow-through rally, and the price softened. That said, aluminium futures retain the bullish bias, and the price action shows that ₹245 is providing good support now.
Going forward, we expect the contract to move up. It can surpass the prior high of ₹250 and touch ₹256 in the near-term. ₹256 is a notable resistance which can trigger a corrective decline.
On the other hand, if aluminium futures declines from the current level of ₹245.50, there are support levels at ₹245 and ₹242, which can arrest the fall. But a breach of ₹242 can be slightly bearish.
While such a break might not turn the medium-term trend bearish, we will most likely see the downswing extending to ₹238 and then possibly to ₹235.
Nevertheless, as it stands, the inclination is bullish.
Trade strategy
Last week, we suggested buying aluminium futures if it surpasses ₹248. Traders who went long following the breakout of ₹248 on Monday can hold the position. Target and stop-loss can be ₹256 and ₹244.