The aluminium futures contract on the Multi Commodity Exchange (MCX) is showing signs of strength. The contract was stuck in a narrow range between ₹152 and ₹155 per kg for most part of last week. However, it has risen breaking above ₹155 on Friday and is continuing to sustain above this level. It is currently trading at ₹156 per kg.

Immediate support is in the ₹155-₹154 region. As long as the contract remains above this support zone, the outlook will remain positive. A rally to ₹158 or ₹160 is possible in the near-term. Traders who have taken short positions at ₹154 and ₹155 as recommended last week can exit the trade at current levels.

A strong break above ₹160 will ease the downside pressure. Such a break will increase the likelihood of the contract rallying towards ₹167 and ₹170 levels again over the medium term.

The near-term view will turn negative only if the contract breaks below ₹154. In such a scenario, a fall to ₹152 can be seen initially. Further break below ₹152 can take the contract lower to ₹150. The region between ₹150 and ₹149 is a crucial support for the contract. The MCX-Aluminium futures contract will come under pressure if it breaks below ₹149. Such a break can drag the contract lower to ₹145 thereafter.

Trading strategy

High risk appetite traders with a medium-term perspective can go long at current levels and on dips at ₹155. Stop-loss can be placed at ₹151 for the target of ₹165. Revise the stop-loss higher to ₹158 as soon as the contract moves up to ₹160.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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