Since the beginning of this month, aluminium futures on the Multi Commodity Exchange (MCX) have been witnessing increased volatility. Though the contract has not been trending, there have been quite a few price swings i.e., the March expiry contract is quickly moving back and forth between ₹170 and ₹178 -the key levels. This has made life difficult for short-term traders. Unless the contract moves out of this range, the next leg of short-term trend will remain uncertain.

Whatsoever, the major trend has been up and the bull run that aluminium futures have been seeing for nearly a year still stay valid. Notably, the price of futures has made significant gains from about ₹126 in May last year to current price levels of ₹175, appreciating by nearly 40 per cent. So despite some volatility, one can take bullish approach towards aluminium futures.

Supporting the bullish view, indicators like the relative strength index and the moving average convergence divergence indicators on the daily chart stays in the positive region although both has come off its peaks. On the other hand, the average directional index shows that bulls and bears are currently lacking strength.

Since the overall trend is positive and the support at ₹170 is acting as a good base, traders can be bullish. But since ₹178 is a hurdle, buy MCX aluminium futures with stop-loss at ₹174 if only it breaches ₹178.

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