Aluminium Futures: Uptrend intact. Go long

Aluminium price has been volatile so far this week. The Aluminium futures (April) contract on the Multi Commodity Exchange (MCX) fell sharply from a high of ₹209.50 per kg to a low of ₹206.30 on Tuesday. From there, the price has recovered and is currently trading at ₹207.70 per kg.

Outlook

The trend has been up since the last week of February this year. There is a good support in the ₹206.50-206 region, which has been holding very well for now. So, as long as the MCX Aluminium contract trades above ₹206, the outlook will continue to remain bullish. Moving average cross-overs on the daily chart also strengthens the bullish case. It indicates that the downside could be limited, and fresh buyers are likely to come into the market at lower levels.

The contract has potential to target ₹211-₹212 in the short-term. Intermediate resistance is at ₹209.50. A break above it can clear the way for the rise to ₹211-₹212 mentioned above.

The contract has to break below ₹206 to come under pressure. Only in that case will the outlook turn bearish. In that case, a fall to ₹204-₹203 can be seen. But as seen from the price action on the charts, such a fall looks unlikely at the moment. As such we expect the Aluminium contract to sustain above ₹206 and rise to ₹211-₹212 going forward.

Trade Strategy

Traders can go long now at ₹207.70. Accumulate on dips at ₹206.70. Keep a stop-loss at ₹205.20. Trail the stop-loss up to ₹208.30 when the contract moves up to ₹209.30. Move the stop-loss to ₹209.80 when the contract touches ₹210.30. Exit the longs at ₹211.