Aluminium futures on the Multi Product Exchange (MCX) have actually mostly been relocating a sideways variety because mid-March. Other than for a short-lived rally to 216 in mid-April, the agreement has actually been variety bound in between 204 and 212 for almost 2 months.
Nevertheless, aluminium has actually been outshining other base metals like copper and zinc for the last 2 months.
Keep In Mind that the 200-204 cost band is assisting the agreement to prevent a fall, a minimum of previously.
Given that aluminium futures have actually bounced off those assistance band a number of times in the last 6 months, our company believe that the likelihood of a rally is greater as long as it trades near this base. The instant resistance levels can be seen at 212 and 216.
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A breach of 216 can activate a leg of benefit where the agreement can see a quick rally to 228. On the other hand, if the assistance at 200 is breached, the aluminium futures is most likely to be dragged to 188.
From a trading viewpoint, risk-reward ratio favours long positions. For that reason, we recommend going long on aluminium futures at the present level of 206 and include more longs if cost dips to 202. Location stop-loss at 196.
When the agreement strikes 212, exit half of the buys and after that tighten up the stop-loss to 209. Liquidate the staying at 216.