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The aluminium futures contract on the Multi Commodity Exchange (MCX) has been stuck inside narrow sideways range. The contract has been stuck in between ₹152 and ₹160 a kg over the last four weeks. Within this range, the contract made a high of ₹158.95 on Thursday and has come-off slightly from there. It is currently trading at ₹156 per kg.
The immediate outlook is mixed. A breakout on either side of ₹152 or ₹160 will determine the next trend. However, the bias is positive on the charts. Intermediate support is at ₹153.5, which is likely to be tested in the near term. A bounce from this support, will keep the possibility high of the contract breaking above ₹160 in the coming days. Such a break will take the contract higher to ₹162 initially. Further break above ₹162 will boost the momentum and will pave way for the next target of ₹170.
The contract will come under pressure if it breaks the current range below ₹152 decisively. Such a break can drag it lower to ₹148 or even ₹145 thereafter.
Trading strategy
High risk appetite medium-term traders who have taken long positions last week at ₹156 and ₹155 can hold it. Retain the stop-loss at ₹151 for the target of ₹165. Revise the stop-loss higher to ₹158 as soon as the contract moves up to ₹160.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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