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BL Research Bureau
The Aluminium futures contract on the Multi Commodity Exchange of India (MCX) fell in the past week. The contract had failed to breach ₹150 per kg and tumbled over 3 per cent last week. It is currently trading around ₹145 per kg.
Though the near-term view remains negative, series of supports can arrest the pace of fall and also limit the downside in the coming days. Key support is in the ₹143-₹142 region which can be tested in the near term. However, a break below ₹142 looks less probable at the moment. The downside is likely to be limited to ₹140 even if the contract declines below ₹140.
As such an upward reversal from the ₹143-₹142 support zone or from ₹140 can take the MCX-Aluminium contract higher to the crucial ₹152-₹153 resistance region.
A strong break and a decisive close above ₹153 will then boost the momentum. Such a break will then pave way for a fresh rally targeting ₹160 and ₹165 over the medium term.
Trading strategy
Traders with a medium-term perspective can make use of dips to go long at ₹143.5 and ₹142. Stop-loss can be placed at ₹138 for the target of ₹151. Revise the stop-loss higher to ₹145 as soon as the contract moves up to ₹148.
Global trend
The Aluminium (3-month forward) contract on the London Metal Exchange (LME) fell in the initial part of last week and remained stable thereafter. The contract fell from around $1,915 per tonne and is currently trading at $1,872 per tonne.
The contract is retaining its $1,850-$1,930 sideways range. It has been stuck inside this range since mid-January. A breakout on either side of $1,850 or $1,930 will decide the next move.
A strong break above $1,930 will pave way for a fresh rally to $2,000. On the other hand, if the contract declines below $1,850, a fall to $1,800 is possible.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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