Aluminium futures on the Multi Commodity Exchange (MCX), which have been rallying since June last year, faced intermittent corrections either in the form of a minor decline or horizontal price movement. On the similar lines, the April futures contract has largely been moving in a sideways fashion but with a bullish bias.
While the price band between ₹170 and ₹174 acted as a support, the 21-day moving average (DMA) offered the contract a dynamic support which helped it retain the bullish tone. Following this, it gained enough strength to breach the critical resistance of ₹180 on Tuesday and on Wednesday, the rally was extended which indicates that the breakout is decisive. Volumes also look good enough.
Additionally, indicators like the relative strength index and the moving average convergence divergence indicators on the daily chart are showing fresh upward momentum. Moreover, the average directional index signals that the bulls have a clear advantage.
Traders can take bullish view and initiate fresh longs with stop-loss at 21-DMA which now lies at around ₹176. The contract is likely to touch the resistance band between ₹188 and ₹190. Subsequent resistance is at ₹195.