Commodity Analysis

Aluminium prices to rally further

Gurumurthy K | Updated on November 22, 2014 Published on August 17, 2014

Double bottom chart pattern supports bullish scenario



The aluminium futures contract traded on the MCX is in a strong uptrend since May, surging 19.5 per cent from its low of ₹101.25 per kg to ₹121 per kg now. Though the contract has reversed lower last week after recording a high of ₹125.45 on Tuesday, the overall outlook for the contract is still bullish. Since the contract has risen sharply in a short span of time, this could just be a pullback on profit taking by traders. The rally since May has happened after the formation of a double bottom chart pattern, which is supportive of the bullish scenario.

Immediate support for the contract is at ₹118.

The medium-term support is at ₹114. There is no risk for the bullish view as long as the contract trades above ₹114. A breach of the resistance at ₹127 will open the doors for a further rally to ₹133 in the medium term.

Traders with a medium-term perspective can initiate fresh long positions in MCX-aluminium futures contract at current levels.

Stop-loss can be placed at ₹113 for a target of ₹132. To accumulate more long positions, intermediate dips to ₹118 and ₹114 can be used as opportunities.

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