Comments
The prices of aluminium gained last week — the December contract of aluminium on the Multi Commodity Exchange (MCX) rebounded from the support at ₹205. Currently trading at around ₹216, the contract has now made a higher high on the daily chart.
However, it should be noted that the contract has a considerable hurdle at ₹220. So, until this level is decisively breached, the bulls might struggle to get an upper hand. That said, on the downside, the contract has a strong support at ₹205.
If the aluminium futures manage to get over the hurdle at ₹220, we can expect a swift rally to ₹250, a resistance level. Immediately above this i.e., at ₹256, lies the 50 per cent Fibonacci retracement level of the prior downtrend. Therefore, the price region of ₹250-256 is a resistance band.
Trade strategy
Stay on the sidelines for now and go long on aluminium futures if the price goes above ₹220. Place initial stop-loss at ₹208.
On a rally past ₹230, revise the stop-loss to ₹220. When the contract rallies past ₹240, tighten the stop-loss further to ₹234. Exit the longs at ₹250.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.