Commodity Calls

MCX-Aluminium is likely to extend its downmove

Gurumurthy K BL Research Bureau | Updated on August 06, 2018 Published on August 06, 2018

The Aluminium futures contract on the Multi Commodity Exchange (MCX) continued to trade subdued all-through last week. The contract hovered around ₹142 per kg initially and fell towards the end of the week. It currently trades at around ₹139 per kg.

The 21-day moving average resistance at ₹141 has been capping the upside over the last couple of weeks. The price action on the chart leaves the bias bearish. This increases the possibility of the contract declining below the immediate support level of ₹138. Such a break will bring fresh selling pressure on the contract. In such a scenario, there is a strong likelihood of the contract tumbling to ₹132 or ₹130 over the short term.

The region between ₹141 and ₹143 is a key near-term support. The contract will get a breather if it breaks above ₹143 decisively. Such a break can trigger a relief rally to ₹147. However, the outlook will turn positive only if the contract breaches ₹147 decisively. But such strong upmove looks less probable as the indicators on the charts are showing negative signs. The 55-day moving average is on the verge of crossing below the 100-day moving average. This is a negative sign indicating that the upside in the contract could be limited.

Trading strategy

Traders who have taken short positions at ₹144 can hold it and can also accumulate at ₹146. Retain the stop-loss at ₹149 for the target of ₹134. Revise the stop-loss lower to ₹140 as soon as the contract moves down to ₹138.

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

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