Overall outlook bullish for MCX-Aluminium

The strong short-term uptrend in the Aluminium futures contract on the Multi Commodity Exchange (MCX), which has been in place since May 11, has halted in the past week. The contract has been facing resistance near ₹127 a kg and is stuck in a narrow range below this hurdle over the last one week.

The overall outlook remains bullish. However, an intermediate dip to ₹124 or ₹123.5 cannot be ruled out before the contract resumes its uptrend. The region between ₹124 and ₹123.5 is a strong support zone that is likely to limit the downside in the short term.

A break below ₹123.5 looks unlikely at the moment. So, such dips to ₹124 and ₹123.5, if seen, will be a good opportunity for traders with a short-term perspective to initiate long positions. An eventual reversal from the ₹124-₹123.5 support zone will take the contract higher to the ₹127 resistance once again.

The possibility of the contract breaking above ₹127 will remain high in such a scenario.

A strong break above ₹127 will see the MCX-Aluminium futures contract rallying to ₹130 thereafter.

Short-term traders can go long on dips at ₹124. A stop-loss can be placed at ₹122 for the target of ₹129. Revise the stop-loss higher to ₹125 as soon as the contract moves up to ₹126.5.

The short-term outlook will turn negative only if the contract declines below ₹123.5. Such a break will increase the likelihood of the contract falling to ₹122 and ₹121 thereafter.

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