The price of aluminium saw a sharp fall last week. Consequently, the continuous futures contract of aluminium on the Multi Commodity Exchange (MCX) — which had hit a high of ₹325.4 in the first week of this month — made a U-turn and declined. It marked a fresh three-week low of ₹262.15 on Tuesday and is currently trading around ₹270.

Despite the recent drop in price, the overall bull trend remains valid. The price stays above the key support band of ₹255-260 and the futures continues to trade above 50-day moving average (DMA). Coincidentally, the 50-DMA remains within the support band of ₹255-260. The contract also lies above the upward sloping trendline, showing that the uptrend stays intact. Considering that the major trend is up, and the price has corrected and stays above key support levels, it could be the right time for the bulls to make a comeback. The risk-reward ratio too remains favourable for long positions at current juncture.

We recommended fresh long positions in the first week of March at ₹300 and ₹275 with stop-loss at ₹260. Those who hold these positions can retain them but widen the stop-loss a bit to ₹255 i.e., the lower end of the support band and revise the target from ₹350 to ₹325. Others can consider fresh longs at current level of ₹270 with stop-loss at ₹255.

When the contract rallies above ₹290, alter the stop-loss to ₹270. At ₹310, liquidate half of your total long positions and further tighten the stop-loss to ₹290. Exit the leftover longs at ₹325.

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