Commodity Calls

Near-term view is positive for MCX-Aluminium

Gurumurthy K | Updated on May 07, 2018 Published on May 07, 2018

BL Research Bureau

The Aluminium futures contract on the Multi Commodity Exchange has reversed sharply higher last week. The contract has surged over 6 per cent in the past week. This has given some relief to the contract after having fallen over 14 per cent in the week earlier. The contract is currently trading at ₹158 per kg.

Outlook bullish

The strong recovery in the past week has eased the downside pressure. Technically, the 21-day moving average halted the sharp fall in the contract and has been serving as a strong support by limiting the downside over the last couple weeks. This leaves the near-term outlook positive for the contract.

The support is in the ₹154-₹152 region can limit the downside in the short term. Dips to this support zone is likely to find fresh buyers coming into the market. Immediate resistance is at ₹160. A strong break above it can take the contract higher to ₹167 or even ₹170.

The bullish outlook will get negated only if the contract breaks below ₹152. Such a break will increase the likelihood of the contract falling to ₹145 or even ₹143 on the back of profit booking.

Trading strategy

Traders can make use of dips to go long at ₹156 and ₹154. Stop-loss can be placed at ₹151 for the target of ₹165. Revise the stop-loss higher to ₹159 as soon as the contract moves up to ₹161.

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

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