The Aluminium futures contract on the Multi Commodity Exchange sky rocketed 7.6 per cent last week. The strong surge has helped the contract to break above the key ₹125-₹126 per kg resistance zone decisively. The contract made a high of ₹130.70 on Thursday and has come-off slightly from there. It has been hovering around ₹130 over the last few days and is currently trading at ₹129.50 per kg. A key resistance is at ₹130.50. The contract will need a strong break and a decisive close above this hurdle in order to extend its upmove in the coming days. Such a break can take the contract higher to ₹132 or ₹133 in the near-term.

But if the MCX-Aluminium futures contract fails to break above ₹130.5 and remains lower, it can come under pressure. In such a scenario, there is a strong likelihood of the contract reversing lower to ₹125 in the coming days. The level of ₹125 is a key resistance-turned-support trendline. An immediate break below it looks less probable. An upward reversal from this support can take the contract higher to ₹130 levels once again. But, if the contract declines below ₹125, the possibility of it declining further towards ₹123 or ₹121 will increase.

Traders can stay out of the market and watch the price action in the coming days to get a clear trading signal.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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