Aluminium price witnessed a strong rise last week. The Aluminium Futures contract traded on the Multi Commodity Exchange (MCX) has risen sharply from a low around ₹237 per kg. It touched a high of ₹248.35 per kg on Tuesday and then has come-off slightly from there. The contract is currently trading at ₹246 per kg.

Outlook

MCX Aluminium contract has resistances at ₹249 and then at ₹251. A rise to test these resistances in the near-term cannot be ruled out. However, a decisive break above ₹251 is needed to strengthen the bullish case for more rise. Only a strong break above ₹251 is needed to clear the way for a rise to ₹257.

Failure to breach ₹251 and a reversal from there will be bearish for the Aluminium contract. Such a reversal will keep the contract under pressure for a fall to ₹240-₹235 again.

As such the price action around ₹257 will need a close watch in the coming days.

Trade Strategy

The bias is negative. As such we expect the upside to be capped at ₹251 and see a reversal going forward. So, we suggest traders to go short on a rise at ₹248 and ₹250. Keep the stop-loss at ₹253. Trail the stop-loss down to ₹246 as soon as the contract falls to ₹244. Move the stop-loss further down to ₹244 when the price touches ₹242. Exit the short positions at ₹241.