Near-term outlook is positive for MCX-Aluminium

After hovering above ₹130 per kg in a narrow range, the Aluminium futures contract on the Multi Commodity Exchange of India (MCX) has risen last week. The contract gained about 3 per cent in the past week and is trading at ₹135 per kg.

The near-term outlook is positive. The contract can extend the current up-move to ₹138 in the near term. Key resistance is between ₹137.5 and ₹138. Inability to breach ₹138 can trigger a pull-back move to ₹134 or ₹133. A strong break and a decisive close above ₹138 is needed for the contract to gain fresh momentum. Such a break will then increase the likelihood of the MCX-Aluminium futures contract targeting ₹142 and ₹143.

A break and a rally to ₹142-₹143 will be bullish from a medium-term perspective. It will confirm an inverted head and shoulders pattern on the daily chart. The neck-line of this pattern is at ₹137 which will then serve as a strong support. The medium-term outlook will then turn bullish and the contract can rally to ₹150 or even higher in the coming weeks.

Trading strategy

Short-term traders can go long at current levels and also accumulate on dips at ₹133. Stop-loss can be placed at ₹131 for the target of ₹142. Revise the stop-loss higher to ₹137 as soon as the contract moves up to ₹139.

Global trend

After hovering around $1,850 for a few days, the Aluminium (3-month forward) contract on the London Metal Exchange (LME) has risen sharply over the last couple of days. The contract has surged about 3 per cent in the past week and is currently trading at $1,913. The outlook is bullish. The LME-Aluminium contract can rise further to $1,935 and $1,950 in the coming days. Inability to breach the resistance level of $1,950 can trigger a pull-back move to $1,900 and $1,880.

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

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