The aluminium futures contract on the Multi Commodity Exchange (MCX) fell sharply in the past week. The contract had tumbled 5 per cent during intra-week and made a low of ₹143.95 per kg on Wednesday last week. The contract continues to hover around this support and is currently trading at ₹145.5 per kg.

The crucial support level of ₹144 is holding well and is limiting the downside. Whether the contract manages to sustain above ₹144 or not will decide the next leg of move. If the contract continues to trade above ₹144 and gains momentum, an up-move to ₹151 and ₹152 is likely in the coming days. Inability to breach ₹152 can drag the contract lower to ₹147 and ₹145 levels again. In such a scenario, a range-bound move between ₹144 and ₹152 can be seen for some time. But, if the MCX-Aluminium futures contract breaks above ₹152, there is a strong likelihood of the contract surging to ₹158 or even ₹160 over the medium term.

On the other hand, if the contract breaks below ₹144 in the coming days, an immediate fall to ₹142 is possible. Further break below ₹142 will then increase the likelihood of the contract extending its fall to ₹140.

Traders can stay out of the market until a clear trend emerges.

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

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