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Aluminium futures on the Multi Commodity Exchange (MCX) has been trading flat over the past week. It was largely held between ₹201 and ₹203. Prior to this sideways move, the contract saw a decline. So, as the contract has now taken a horizontal path, the downtrend can be assumed to have lost momentum.
Moreover, aluminium futures has a strong support band of ₹200-202 that can be seen clearly on the daily chart. On the back of this support, we expect the contract to perform a recovery. While ₹205 can be a minor hurdle, the contract can see a rally to ₹215.
That said, if the price falls below the support at ₹200, aluminium futures can be expected to see a leg of downtrend. Notable support below ₹200 are at ₹195 and ₹192.
But as it stands, the likelihood of a recovery is high.
Trade strategy
We recommended initiating long positions at ₹206 with stop-loss at ₹200. Hold this trade.
From here, when the contract rallies to ₹212, tighten the stop-loss to ₹208. Book profits at ₹215.
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