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The continuous contract of aluminium on the Multi Commodity Exchange of India (MCX) found support at ₹130 in May 2020 and started to trend upwards. Since then, the contract has been in a long-term uptrend.
Following a sideways consolidation above the key support level of ₹160, the contract resumed the uptrend in early February this year and it has been in a medium-term uptrend since then. At around ₹200, the contract met with a significant resistance in early May this year and has been in a sideways consolidation phase in the wide band between ₹185 and ₹200.
Last week, the upper boundary limited the rally in the contract and it is now trading at around ₹197.5. A strong break above the key resistance at ₹200 will strengthen the uptrend and take the contract northwards to ₹210 and then to ₹220 levels over the short-term. Failure to move beyond ₹200 can pull the contract down to ₹190 levels initially.
Therefore, traders can wait and buy aluminium futures above ₹200 levels with stop-loss at ₹190.Targets are ₹210 and ₹220. On the downside, if the contract falls below ₹185, selling pressure will intensify and pull the contract down to ₹175 and ₹170 levels.
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