The MCX-Aluminium futures contract on the Multi Commodity Exchange (MCX) witnessed a sharp rise to test ₹125 a kg in the past week as expected. The contract has surged over 3 per cent and is currently trading at ₹125.24.
The rally in the past week has taken the contract above the key trend-line resistance at ₹124.5. This level may now serve as a good support. As long as the contract is above this support, the outlook will remain bullish.
A rise to ₹128 is likely in the near term. A strong break above ₹128 will see the upmove extending to ₹130 and ₹131 levels.
Short-term traders with a big risk appetite can go long on dips near ₹124.7. A stop-loss can be placed at ₹123.2 for the target of ₹128. Revise the stop-loss higher to ₹126 as soon as the contract moves up to ₹127.
The region between ₹130 and ₹131 is a crucial long-term resistance. The price action after testing this level will be key in deciding the next leg of movement.
A strong break and a decisive weekly close above ₹131 will increase the likelihood of the contract rallying to ₹135 and ₹140 levels thereafter.
But a reversal from ₹130 or ₹131 can pull the contract lower to ₹128 and ₹125 levels once again.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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