Aluminium prices appear likely to bounce back this week. The aluminium futures contract traded on Multi Commodity Exchange (MCX) made a low of ₹203.50 per kg last week. It then managed to rise back and currently trades at ₹205 per kg.
The rise above ₹204 is a positive sign. The region between ₹204.20 and ₹204 will now be a good support. Immediate resistance is at ₹206.50. But as long as the contract trades above ₹204 the outlook will be bullish. So, the aluminium futures contract is highly likely to breach ₹206.50 in the coming days. Such a break can take the contract up to ₹209-210 this week.
Support below ₹204 is at ₹203. The contract will come under pressure only if it declines below ₹203. In that case, there may be a fall to ₹202 and ₹201 in the short term, but that looks less likely.
The price action on the daily chart indicates that the MCX aluminium contract can sustain well above ₹204 and rise past ₹206.50 in the coming days.
Traders can go long now. Accumulate on dips at ₹204.50. Keep the stop-loss at ₹202.50. Trail the stop-loss up to ₹206.20 as soon as the contact moves up to ₹207. Move the stop-loss further up to ₹207.30 when the price touches ₹208.10. Exit the long positions at ₹208.50.