Aluminium futures on the Multi Commodity Exchange (MCX) has been witnessing a rally for the last three weeks. It had found support at around ₹195 and rebounded. The contract then broke out of the resistance at ₹210 and rallied.
However, over the past few sessions, the contract has been flat. The contract is facing a resistance at ₹226. Due to this, we might see a price correction, possibly to ₹215-210 price band. A fall below ₹210 can turn the near-term outlook weak.
On the other hand, a breakout of ₹226 can turn the medium-term trend bullish. In such a case, aluminium futures can rally to ₹250, the nearest notable support. But one should note that ₹226 is a strong resistance and the fate of bulls depends on this level.
Trade strategy
Stay out as aluminium futures is hovering near a resistance even though the bias appears positive.
Traders with higher risk appetite can consider going short now at ₹224. Target and stop-loss can be ₹215 and ₹230, respectively.