Technical Analysis

Outlook remains positive for MCX-Aluminium

Gurumurthy K BL Research Bureau | Updated on January 28, 2019 Published on January 28, 2019

The Aluminium futures contract on the Multi Commodity Exchange extended its rally for the second consecutive week. The contract surged about 4 per cent intra-week and made a high of ₹136.8 per kg on Wednesday last week. It has come off slightly from the high and is currently trading at ₹135 per kg.

 

The near-term outlook remains positive. Support is in the ₹132-131 region which is likely to limit the downside in the near term. An upmove to test the next resistance at ₹138 is likely in the near term. Inability to breach ₹138 can pull the contract lower to ₹133 or ₹132 again. In such a scenario, a range-bound move between ₹131 and ₹138 can be seen for a while.

On the other hand, if the MCX-Aluminium futures contract manages to break decisively above ₹138, it can gain fresh momentum. Such a break can take the contract higher to ₹141. A further break above ₹141 will then increase the likelihood of the contract extending its upmove towards ₹145.

Traders can go long on dips at ₹133 and ₹132. Stop-loss can be placed at ₹129 for the target of ₹140. Revise the stop-loss higher to ₹135 as soon as the contract moves up to ₹138.

Global trend

The Aluminum (three-month forward) contract on the LME has risen over 2 per cent last week. The contract has been oscillating around $1,900 per tonne over the last few days. It is currently poised at $1,920. Supports are at $1,900 and $1,885. The outlook will remain positive as long as the contract sustains above this support zone.

Immediate resistance is at $1,930. A strong break above it can take the LME-Aluminum higher to $1,960 and $1,970 in the coming days.

The contract will come under pressure only if it declines below $1,885. The next target is $1,845.

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