The June futures contract of aluminium on the Multi Commodity Exchange (MCX), which went up during the first half of last week, gave up its gains as it witnessed considerable sell-off in the latter half. But the price has managed to stay above both the 21- and 50-day moving averages (DMAs), retaining its upward bias.

Also, the price area between ₹133 and ₹134 is a good support band as 21- and 50-DMAs and 61.8 per cent Fibonacci retracement level of the previous rally lies within these levels. Thus, the contract can go up as long as it remains above the support band.

As the price moderated last week, the relative strength index (RSI) and the moving average convergence divergence (MACD) on the daily chart are showing signs of weakness even as both lie within their respective bullish regions as indicated by the RSI which is above the midpoint level of 50 and the MACD at the positive levels.

If the contract takes support at ₹133 and rises, it might face a hindrance at ₹137. A breakout of that level can lift the contract to ₹141. On the other hand, if the price slips below the support band, it can attract sellers and drag the contract further. The support levels below ₹133 are at ₹130 and ₹125.

On the global front, the price of the three-month rolling forward contract of primary aluminium on the London Metal Exchange (LME) softened last week. However, the trend remains bullish and is currently hovering around $1,600. Unless the contract decisively breaks below that level, it is likely to remain bullish.

Trading strategy

Even though the price of MCX-Aluminium has moderated, the contract rules above the important support level of ₹133. As long as it stays above that level, the likelihood of bulls regaining traction is high. So, traders can buy the contract with stop-loss at ₹130.

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

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