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The Aluminium futures contract on the Multi Commodity Exchange (MCX) has reversed sharply higher in the past week. The support in the ₹127-129 per kg region has held well as expected and has halted the downtrend that was in place since November.
The contract made a low of ₹128.4 on Wednesday and has surged 2.9 per cent from this low and is currently trading at ₹132.1/kg. The current bounce back move can extend to ₹133 or ₹134.
The region between ₹134 and ₹134.5 is a key resistance for the contract.
Whether it manages to breach above this hurdle or not will determine the next move.
Inability to break above ₹134.5 can trigger a pull-back move to ₹132 or ₹131 initially. Further break below ₹131 will increase the likelihood of the contract revisiting ₹129 levels again.
In such a scenario, there is a strong likelihood of seeing a sideways move the range between ₹129 and ₹134 for some time.
On the other hand, if the contract manages to breach ₹134.5 it can gain fresh momentum. Such a break will increase the possibility of the contract rallying to ₹136 or even to ₹137.
Traders can stay out of the market at the moment. Watch the price action in the coming days which could give a clear cue on the next trend and also a confirmed trade signal.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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