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The aluminium futures contract on the Multi Commodity Exchange (MCX) has been volatile in the past week. The resistance in the ₹150-₹152 region continues to hold well. The contract made a high of ₹150.4 per kg on Wednesday last week and reversed lower to make a low of ₹145.15 on Friday. However, the contract has reversed higher again and currently trades at ₹151 per kg.
If the contract fails to breach ₹152 in the coming sessions, a pull-back move to ₹147 and ₹144 is likely. In such a scenario, a range-bound move between ₹144 and ₹152 can be seen for some time. A break below ₹144 can take the contract lower to ₹142 or ₹140. But such a fall looks less probable as the bias remains positive on the charts.
An eventual break above ₹152 can take the contract higher to ₹157 and ₹158. A strong break above ₹158 will boost the momentum and will increase the likelihood of the contract extending its rally to ₹163 over the medium term. But a pull-back from the ₹157-₹158 resistance region can trigger an intermediate corrective fall to ₹155.
Trading strategy
Medium-term traders can hold the long positions taken last week. Retain the stop-loss at ₹141 for the target of ₹162. Revise the stop-loss higher to ₹151 as soon as the contract moves up to ₹153.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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