The Aluminium futures contract on the Multi Commodity Exchange (MCX) is stuck in a narrow range between ₹142 and ₹147 per kg for more than two weeks now. Within this range, the contract hit a high of ₹145.9 on Thursday but soon after fell to ₹142.45. It has bounced slightly and currently trades at ₹143.5 per kg.

The sideways range movement between ₹142 and ₹147 remains intact. A breakout on either side of ₹142 or ₹147 will determine the direction of the next move.

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

A strong break below ₹142 will increase the downside pressure and can drag the contract lower to ₹137 and ₹136. The region between ₹136 and ₹135 is a crucial medium-term support. Whether the contract manages to reverse higher from this support zone or not will be crucial in deciding the direction of move. The price action around ₹136 and ₹135 will need a close watch for a cue on the next trend. A strong bounce from ₹135 will signal the end of the current downtrend that has been in place since October.

On the other hand, if the contract manages to sustain above ₹142, an upmove to ₹145 and ₹147 is likely. Inability to breach ₹147 decisively will pull the contract lower to ₹142 again. In such a scenario, the contract will continue to trade in the ₹142-₹147 range for some more time. But if the MCX-Aluminium futures contract breaks above ₹147 decisively, it can gain fresh momentum. Such a break can take the contract higher to ₹150 and ₹152. This up move after breaking above ₹147 could be fast on the back of short covering.

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

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