Technical Analysis

MCX-Aluminium is stuck in a sideways range

BL Research Bureau | Updated on March 25, 2019 Published on March 25, 2019

The Aluminium futures contract on the MCX has been stuck in the band between ₹143 and ₹149 per kg over the last three weeks. Within this range the contract made a high of ₹148.55 on Tuesday last week and has come-off sharply from there. The contract made a low of ₹144.2 on Friday and bounced up slightly from there to the current levels of ₹145 per kg.

The near-term outlook is unclear. A breakout on either side of ₹143 or ₹149 will decide the direction of the next move. A strong break below ₹143 will turn the outlook negative. Such a break will take the contract lower to ₹140 or ₹139. The region between ₹140 and ₹139 is a strong support which is likely to limit the downside. A further fall below ₹139 looks less probable at the moment.

On the other hand, if the MCX-Aluminium futures contract breaks the current range above ₹149, it will gain momentum. Such a break can take the contract higher to ₹152 and ₹153. As mentioned last week, the region between ₹152 and ₹153 is a crucial resistance. A strong break and a decisive close above ₹153 will pave way for the next targets of ₹158 and ₹160 over the medium-term.

Global trend

The Aluminum (three-month forward) contract on the LME broke above $1,935 per tonne but failed to sustain higher. The contract made a high of $1,951 on Wednesday last week and has come-off sharply from there. It is currently trading at $1,903 per tonne.

The region between $1,925 and $1,935 will now act as a good resistance. As long as the contract trades below this resistance zone a fall to $1,845 is possible. A break below $1,845 will increase the likelihood of the contract extending its fall to $1,800 . However, a bounce from $1,845 can take the contract higher to $1,900 and $1,935 again.

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

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