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The Aluminium futures contract on the Multi Commodity Exchange (MCX) extended its fall last week breaking below the key ₹154-₹152 a kg support zone. However, the fall seems to have lost pace over the last few days and the contract has been stuck in a narrow range between ₹149.5 and ₹152. It is currently trading at ₹150.5 per kg.
The price action on the chart suggests the contract is lacking fresh and strong selling interest below ₹150. A breakout on either side of ₹149.5 or ₹152 will decide the next move.
If the MCX-Aluminium futures contract manages to breach decisively above ₹152, the downside pressure will ease. Such a break will bring fresh buyers into the market. The contract can then move higher to ₹158 or ₹160 in the coming days.
On the other hand, if the contract declines below ₹149.5, it can initially fall to ₹148. A bounce from ₹148 can take it higher to ₹151 and ₹152 once again. But a break below ₹148 will increase the likelihood of the contract extending its fall to ₹145 or ₹144.
Trading strategy
Traders who have taken long positions last week at ₹153 can hold it. Retain the stop-loss at ₹148. Revise the stop-loss higher to ₹155 as soon as the contract moves up to ₹158. Book profits at ₹163.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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