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The Aluminium futures contract on the Multi Commodity Exchange (MCX) has reversed higher in the past week within its ₹137-141 sideways range. The contract made a low of ₹137.15/kg and has bounced higher to test ₹141. However, the resistance in the ₹140.5-141 region is restricting the contract from rallying further. It is currently hovering at this resistance zone, at ₹140 per kg.
A strong break above ₹141 is needed for the contract to gain momentum. Such a break can take the aluminium futures contract higher to ₹143. The level of ₹143 is a key long-term trend resistance. An immediate break above this hurdle is less probable. A pull back from there can drag the contract lower to ₹141 and ₹140 again. Further break below will see the corrective fall extending to ₹139 and ₹137 thereafter.
On the other hand, if the contract remains below ₹141 in the coming days, it can test ₹139 again. A break below ₹139 can pull the contract further lower to ₹137. In such a scenario, the contract can remain stuck in between the ₹137-141 sideways range for some more time.
The contract will come under renewed pressure if it breaks below ₹137 decisively. Such a break can drag the contract lower to ₹135 or even ₹132 thereafter. Traders can stay out of the market at the moment and wait for a clear trade signal to emerge.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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