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The Aluminium futures contract on the Multi Commodity Exchange fell below a key support level of ₹121.5 a kg in the past week.
However, the contract has not witnessed any strong follow-through selling after this break and has been stuck in a narrow range between ₹120 and ₹121 since then.
It is currently trading at ₹120.5 per kg.
The 200-day moving average support is at ₹119.5, which is likely to be tested as long as the contract trades below ₹121.5.
If the contract manages to sustain above the 200-day moving average support, a range bound move between ₹119.5 and ₹121.5 is possible for some time.
A breakout on either side of ₹119.5 or ₹121.5 will then determine the next move.
A decisive break below ₹119.5 can increase the selling pressure. Such a break can drag it to ₹117 or even ₹115 going forward.
On the other hand, the downside pressure will ease if the contract manages to decisively advance above ₹121.5 from either current levels or reversing higher after testing the 200-day moving average support level of ₹119.5.
Such a move will increase the possibility of the contract rising to ₹123 and ₹124 levels once again.
A further break above ₹124 will increase the likelihood of the contract extending its upward move to ₹127 thereafter.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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