The Aluminum Futures contract traded on the Multi Commodity Exchange (MCX) has moved up sharply over the last couple of weeks. The price spiked to a high of ₹226.45 per kg last week and has come-off from there. It is currently trading at ₹221.30 per kg.
The pull-back from the high of ₹226.45 is holding well above the crucial ₹217-₹216 support zone. Resistances are at ₹223.80-₹224 and ₹225. So, broadly ₹217-₹225 can be the trading range for this week.
A breakout on either side of ₹217 or ₹225 will determine the next direction of move. A strong break above ₹225 will be bullish to see a rise to ₹229-₹230 initially. Such a move will also confirm the inverse head and shoulder pattern that was mentioned in this column last week. That will keep the chances high for the MCX Aluminum to target ₹250 on the upside over the medium term.
On the other hand, if the MCX Aluminum breaks down and makes a weekly close below ₹217, then it will be bearish. In that case a fall to ₹215 initially and then to ₹212-₹210 and even ₹206-₹205 can be seen.
Last week, we had suggested to go long on a break above ₹220. That has got triggered. Follow the same strategy. Retain the stop-loss at ₹210. Trail it up to ₹220 when the contract rises to ₹232. Move the stop-loss further up to ₹232 when the price rallies above ₹240. Exit the longs at ₹250.