The Aluminium futures contract on the Multi Commodity Exchange (MCX) shows signs of weakness.
The contract has declined below a key support level of ₹136 akg which was limiting the downside for more than a month. The contract made a high of ₹138.55 on Thursday and reversed lower sharply breaking below ₹136. It is currently trading at ₹135.
Immediate resistance is in the ₹136-₹137.5 region which is likely to cap the upside in the near term. Intermediate bounce to this resistance zone may find fresh sellers coming into the market.
Short-term traders with a high-risk appetite can go short on rallies at ₹136. Stop-loss can be placed at ₹138 for the target of ₹132. Revise the stop-loss lower to ₹135 as soon as the contract moves down to ₹133.5.
A fall to test ₹132.5 – the 100-day moving average or ₹131.80 – the 50 per cent Fibonacci retracement support is likely in the near-term. If the contract manages to reverse higher from either of these support, a relief rally to ₹135 or ₹136 is possible.
On the other hand, if the contract declines below ₹131.8, it can fall to ₹131 and ₹130. Further break below ₹130 will increase the possibility of the down move extending to ₹128. Cluster of supports are poised in the range between ₹132 and ₹130.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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