Commodity Calls

MCX-Aluminium is rangebound with a bullish bias

Gurumurthy K BL Research Bureau | Updated on February 04, 2019 Published on February 04, 2019

The Aluminium futures contract on the Multi Commodity Exchange (MCX) was volatile in the past week. The contract fell to a low of ₹131.3 per kg initially but reversed sharply higher to make a high of ₹136.25 on Friday. It has come-off slightly from the high and is currently trading at ₹135 per kg. Though the weekly candle looks indecisive, the daily chart remains bullish.

The 21-day moving average at ₹132 is providing strong support. Resistance is at ₹137 – the 100-week moving average. The contract has been broadly rangebound between ₹132 and ₹137 over the last couple of days.

However, the bias remains positive. As long as the contract trades above ₹132, there is a strong likelihood of it rallying towards ₹140 in the coming days. A further break above ₹141 will then increase the likelihood of the contract extending its upmove towards ₹145.

The bullish outlook will get negated only if the contract breaks below the 21-day moving average decisively. In such a scenario, the contract can fall to ₹129 and ₹128.

Trading strategy

Traders can hold the long positions taken on dips last week at ₹133 and ₹132. Retain the stop-loss at ₹129 for the target of ₹140. Revise the stop-loss higher to ₹135 as soon as the contract moves up to ₹138.

Global trend

The Aluminum (3-month forward) contract on the London Metal Exchange (LME) has been facing strong resistance around $1,925 per tonne. It made a high of $1,924 on Thursday last week and has come off sharply to the current levels of $1,883 per tonne.

A dip to $1,850 looks likely in the near term. A break below $1,850 will increase the likelihood of the contract extending its fall towards $1,820 and $1,800.

The outlook will turn positive only if the contract breaks above $1,925 decisively. The next targets are $1,940 and $1,960.

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

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