The Aluminium futures contract on the Multi Commodity Exchange (MCX) surged 5 per cent on Friday and closed on a strong note for the week. It is currently trading at ₹211 per kg.
On the daily chart, the rally on Friday indicates a bullish breakout above the key resistance level of ₹208.7. This leaves the short-term bias bullish.
However, key resistances are ahead at ₹212.8 — the 100-Week Moving Average and then at ₹216-₹217. The bullish case will strengthen only if the contract breaks decisively above ₹217.
The break above ₹217 is possible if the MCX Aluminium Futures contract manages to sustain above ₹208.7. Such a break can take the contract up to ₹220-₹221 in the short term.
The contract will come under pressure again if it declines below ₹208.7. In that case, the contract can fall to ₹205-₹204.5 initially. A further break below ₹204.5 will increase the chances of revisiting ₹200 levels on the downside.
We expect the MCX Aluminium contract to sustain above the immediate support at ₹208.7 and rise to ₹216-₹217 initially and then to ₹220-₹221 eventually.
Traders with a short-term perspective can go long at current levels. Accumulate on dips at ₹209. Keep the stop-loss at ₹206. Trail the stop-loss up to ₹213 as soon as the contract moves up to ₹216. Move the stop-loss further up to ₹215 when the contract touches ₹217 on the upside. Book profits at ₹218.