Aluminium prices have begun the week on a strong note. The aluminium futures contract on the Multi Commodity Exchange (MCX) has surged about 3 per cent in the first two days of the week, recovering the loss from the previous week. The contract is currently trading at ₹211 per kg.
The near-term outlook is bullish. Immediate support is at ₹208.30. Below that, ₹205 — the 21-week moving average — is the next important support, which has been limiting the downside this week. As long as the contract trades above these supports, it is highly likely to move further up in the coming days. The MCX aluminium contract can target ₹217-218 on the upside.
The region between ₹217 and ₹218 is a strong support. The 200-day moving average, 100-week moving average, and a trendline resistance are all present in this region. This makes ₹217-218 a strong and crucial resistance zone. So, the likelihood of a pullback from ₹217-218 cannot be ruled out. A decisive rise past ₹218 will be needed for an extension of the current upward movement. As such the price action around ₹217-218 will need a close watch.
Trading strategy
Traders can go long at current levels. Accumulate longs on dips at ₹209. Keep the stop-loss at ₹207. Trail the stop-loss up to ₹212.5 as soon as the contract moves up to ₹215. Move the stop-loss further up to ₹214 when MCX Aluminium touches ₹215 on the upside. Exit the longs at ₹216.