Aluminium price is gaining momentum over the last few days. The Aluminium Futures contract (January) touched a low of ₹237.50 per kg last week and then has risen very well from there. It is currently trading at ₹242 per kg.

Outlook

The outlook is bullish. Support in the ₹237.50-₹237 region has held very well. Resistance is now in the ₹242-₹242.50 reigon. A strong break above ₹242.50 can boost the bullish momentum. Such a break can take the MCX Aluminium contract up to ₹247-₹248 initially. A further break above ₹248 will take the contract up to ₹251-₹252.

On the other hand, failure to breach ₹242.50 can take the contract down to ₹237.50-₹237 again. In that case, a range bound move between ₹237 and ₹242.50 can be seen for some time. In case the contract breaks below ₹237, a fall to ₹235 can be seen. That will increase the danger of the outlook turning bearish going forward. If that happens, an extended fall to ₹232-₹230 can be seen on a break below ₹235.

So, if the contract turns down from around ₹242.50, then some caution is needed to see if the fall is breaking below ₹237 or not.

For now, looking at the strong rise from around ₹237.50, we see high chances for a break above ₹242.50 in the coming days.

Trade Strategy

Wait for a breakout and go long only above ₹242.50. Keep the stop-loss at ₹239. Trail the stop-loss up to ₹245 as soon as the contract goes up to ₹248. Move the stop-loss further up to ₹247 when the price touches ₹249.  Exit the long positions at ₹251.

Published on December 26, 2024