MCX-Aluminium hovers above a crucial support



The aluminium futures contract on the Multi Commodity Exchange continues to remain within its broad ₹135-₹145 a kg sideways range. The contract has been stuck in this range for more than two months. Within this range, the contract fell sharply over 3 per cent intra-week and made a low of ₹135.8 on Thursday. However, it has managed to bounce from this low recovering some loss and is currently trading at ₹137/kg. Whether the contract manages to sustain above ₹135 or not will be key in deciding the next move. Traders can stay out of the market until a clear trend and trade signal emerges.


Immediate resistance is at ₹138.3 – the 100-day moving average. A break above it will ease the downside pressure and take the MCX-Aluminium futures contract to ₹139.5. Further break above ₹139.5 will boost the momentum. Such a break will then increase the likelihood of the contract extending its up move towards ₹143 or ₹144 in the coming days.

On the other hand, if the contract fails to breach the 100-day moving average resistance (₹138.3) in the coming days, it can remain under pressure. In such a scenario, the possibility of the contract falling below ₹135 will increase. A strong break below ₹135 will drag the contract lower to ₹133, ₹132 or even to ₹130 on the back of profit booking.


Cluster of supports are poised in between ₹133 and ₹130 which can slow down the pace of the fall. An upward reversal from this ₹133-₹130 support zone can trigger a relief rally towards ₹135 and ₹137. But a strong break below ₹130 will increase the likelihood of the fall extending towards ₹127.

Traders with a high-risk appetite can go short on a break below ₹135. Stop-loss can be placed at ₹136.5 for the target of ₹132. Revise the stop-loss lower to ₹134 as soon as the contract moves down to ₹133.

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

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