The aluminium futures (continuous contract) (₹212.4) on the MCX (Multi Commodity Exchange) was trading sideways for nearly two months. Since mid-June, the contract has been range-bound between ₹200 and ₹215.

On last Thursday, the contract broke the resistance of ₹215 and moved above 20- and 50-day moving averages (DMAs). While this is a positive sign, aluminium futures closing below ₹215 should be taken with a pinch of salt.

Nevertheless, the contract is now above the 20-DMA support where a rising trendline coincides. The recent rally is substantiated by rising Open Interest (OI) i.e., the cumulative OI of aluminium futures on the MCX increased to 4,652 contracts against 3,209 as on August 5. A price rally accompanied by increasing OI indicates a long build-up.

Also, indicators like the RSI and the MACD on the daily chart are indicating bullish signals.

Considering these, the contract is expected to move up to ₹230 in the short-term. This is a strong resistance as the 23.6 per cent Fibonacci retracement lies at this level. Therefore, one can risk buying MCX aluminium futures at the current level of ₹212 with stop-loss at ₹204. Exit the longs at ₹230. Fresh trades can be decided based on how the contract reacts to ₹230.