Commodity Calls

Near-term outlook is mixed for MCX-Aluminium

Gurumurthy K BL Research Bureau | Updated on September 10, 2018 Published on September 10, 2018

Contrary to expectations, the aluminum futures contract on the Multi Commodity Exchange (MCX) fell in the last week, breaking below the key support level of ₹147 per kg to a low of ₹145.3 on Thursday. The contract has managed to recover slightly since then and currently trades at ₹147 per kg.

The immediate outlook is mixed. A near-term support is at ₹145 and resistance is at ₹149. A breakout on either side of ₹145 and ₹149 will decide the next direction of move. A break below ₹145 can take it to ₹144 initially. Further break below ₹144 will then increase the likelihood of the contract falling to ₹140 or even lower.

On the other hand, if the contract sustains above ₹145 and breaks above ₹149, it can move up to test the ₹151-₹152 resistance region. A strong break and a decisive close above ₹152 will boost the momentum. Such a break will trigger a fresh rally to ₹158 or even ₹160.

Trading strategy

Traders with a big risk appetite and a medium-term perspective can go long on a break above ₹149. Stop-loss can be placed at ₹144 for the target of ₹158. Revise the stop-loss higher to ₹151 as soon as the contract moves up to ₹153.

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

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