Aluminum futures contract on the Multi Commodity Exchange witnessed a strong rally as expected in the past week. The contract surged about 5 per cent intra-week and made a high of Rs 152.35 per kg on Thursday. The contract has however come-off from its high and is currently trading at Rs 149 per kg.

The short-term outlook is bullish. However, an intermediate dip to test the key near-term support at Rs 147 cannot be ruled out. But a break below Rs 147 looks less probable. Indicators on the chart are also giving bullish signals.

The 21-day moving average has crossed over the 200-day moving average and is on the verge of crossing over the 55-day moving average. This is a bullish signal indicating that the downside could be limited in the near term.

As such dips to Rs 147 is likely to find fresh buyers coming into the market. A strong bounce from Rs 147 will have the potential to take the MCX-Aluminium futures contract higher to Rs 154 initially. Further break above Rs 154 will then pave way for the next targets of Rs 158 and Rs 160 thereafter in the coming weeks.

The bullish outlook will get negated if the contract declines below Rs 147. In such a scenario, a fall to Rs 144 or Rs 143 is possible.

Trading strategy

Medium-term traders, who have taken long positions last week at Rs 145, can hold it with a revised stop-loss at Rs 146. Move the stop-loss further higher to Rs 149 as soon as the contract moves up to Rs 152. Book profits at Rs 155.

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

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