Bulls have been in complete control over aluminium for the past one year as the continuous futures contract of the metal on the Multi Commodity Exchange (MCX) has been rallying since May last year. Even though there was a slowdown in the form of consolidation in December and January, the contract regain steam and broke out of the range and established another leg of uptrend in February. But before a couple of weeks, after reaching ₹196 levels, the movement became flat. That is, it was trading in a tight range between ₹192 and ₹196. However, the contract remained inclined to the upside.
On Thursday, the contract breached the resistance at ₹196, re-igniting the bullish spirit. As such the major trend is up and the breakout means more strength to the contract which is affirmed by the average direction index as it shows renewed positive momentum. In line with the positive bias, the moving average convergence divergence indicator on the daily chart lies in the bullish zone and the daily relative strength index is showing a fresh uptick and stays in the positive territory.
Taking the above factors into account, traders can remain bullish and buy aluminium futures i.e., go long in MCX-Aluminium May futures with stop-loss at ₹194. While the price level of ₹200 can create some difficulty for the bulls, the contract is expected to get past this hindrance and touch ₹205 in the near-term. A breakout of this level can lift the contract to ₹210.