Aluminum prices have been rising well over the last few weeks. The Aluminium Futures contract on the Multi Commodity Exchange (MCX) had surged about 5 per cent last week. This rise has taken the contract very well above the ₹223-₹224 resistance zone. The contract has risen further and is now trading at ₹231 per kg.

Outlook

The short-term outlook is bullish. Immediate support is around ₹227. The price action last week indicates the presence of strong buyers in the ₹224.50-224 region. So the region around ₹225 will continue to act as a strong support if a fall below ₹227 is seen.

However, we see high chances for the contract to sustain above ₹227 itself. MCX Aluminium Futures contract can rise to ₹235 in the next few sessions. 

The price action thereafter will need a close watch. Failure to breach ₹235 can trigger a corrective fall to ₹230-228. That corrective fall extending beyond ₹228 could be less likely. 

So, a fresh rise from around ₹228 will have the potential to breach ₹235. Such a break can take the MCX Aluminium Futures contract up to ₹240 in the short-term.

The Aluminium contract will have to fall below ₹224 in order to negate the bullish view and become bearish. Only then a fall to ₹220 will come into the picture. But the charts are looking strong. So, a fall below ₹224 is unlikely now.

Trade strategy

Traders can go long now at ₹231. Accumulate on dips at ₹228. Keep the stop-loss at ₹226.50. Trail the stop-loss up to ₹232 as soon as the contract moves up to ₹233.

Move the stop-loss further up to ₹233.50 when the contract touches ₹234 on the upside. Exit the long positions at ₹235.

Published on August 26, 2024