Commodity Calls

MCX-Aluminium is stuck in a narrow range

Gurumurthy K BL Research Bureau | Updated on November 05, 2018 Published on November 05, 2018

The Aluminium futures contract on the Multi Commodity Exchange of India (MCX) has been consolidating sideways over the last one week. The contract has been stuck in a narrow range between ₹143 and ₹147 per kg. Within this range, the contract is currently trading at ₹146.5 per kg.

The near-term outlook is unclear. A breakout on either side of ₹143 or ₹147 will determine the next move. Traders can stay out of the market until a clear trend signal emerges.

If the contract manages to sustain above ₹143 and breaks above ₹147, the downside pressure will ease. Such a break will take the contract initially higher to ₹149 or ₹150. A further break above ₹150 will then increase the likelihood of the contract extending its rally to ₹153 or ₹155 over the short term.

On the other hand, if the MCX-Aluminium futures contract breaks below ₹143, it can fall to ₹140 or ₹138 in the near term. If the contract manages to bounce from the ₹140-₹138 support zone, a corrective rally to ₹143 is possible. But a break below ₹138 will increase the downside pressure and will drag the contract lower to ₹135 over the short term.

The level of ₹135 is a crucial medium-term support for the contract. As such the price action around ₹135 will need a close watch which might give a cue on the next trend. A strong bounce from ₹135 will signal the end of the current downtrend that has been in place since October. It will also mark the beginning of a new leg of upmove.

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

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