Technical Analysis

Near-term outlook mixed for MCX-Aluminium

Gurumurthy K BL Research Bureau | Updated on February 18, 2019 Published on February 18, 2019

The Aluminium futures contract on the MCX fell in the initial part of the previous week and made a low of ₹130.20 per kg on Tuesday last week. Thereafter the contract has been stuck in a narrow range between ₹130 and ₹134. Within this range, the contract is currently trading at ₹131 per kg.

The near-term outlook is unclear. The contract can remain range-bound between ₹130 and ₹134 for some more time. A breakout on either side of ₹130 or ₹134 will then decide the direction of the next move. Traders can stay out of the contract until a clear trade signal emerges.

A break below ₹130 can take the contract initially lower to ₹128 or ₹127. A further break below ₹127 will then increase the likelihood of the fall extending towards ₹123.

On the other hand, if the MCX-Aluminium futures contract breaks above ₹134, it can rise to ₹137 or ₹138. Inability to breach ₹138 can trigger a pull-back move to ₹134 again. But a strong break above ₹138 can take the contract further higher to ₹142 and ₹143.

Global trend

The Aluminum (three-month forward) contract on the LME remained below $1,900 all through last week. The contract was stuck in a narrow range between $1,845 and $1,885 in the past week.

The near-term outlook is mixed. A support is at $1,845 and a resistance is at $1,900. A breakout on either side of $1,845 or $1,900 will decide the direction of the next move.

A break below $1,845 will bring renewed selling pressure and drag the contract to $1,800. On the other hand, a strong break above $1,900 is needed to turn the outlook positive. Such a break will ease the downside pressure and take the contract higher to $1,945.

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

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