Technical Analysis

Resistance caps the upside in MCX-Aluminium

Gurumurthy K BL Research Bureau | Updated on February 11, 2019 Published on February 11, 2019

The Aluminium futures contract on the MCX surged over 3 per cent intraweek but failed to sustain higher. The contract made a high of ₹138.85 per kg on last Tuesday and has come-off sharply from there giving back all the gains made during the week. It is currently trading at ₹133 per kg, down about a per cent for the week.

The 100-week moving average resistance at ₹137 is continuing to cap the upside. This resistance has been restricting the MCX-Aluminium contract over the last three weeks from a strong rally. A near-term support is at ₹131 which is likely to be tested in the coming days. If the contract manages to bounce from this support, an upmove to ₹135 and ₹137 is possible. In such a scenario, the contract can remain range-bound between ₹131 and ₹137 for some time. A breakout on either side of this range will then determine the direction of the next move. Traders can stay out of the market until a clear trend emerges.

A break below ₹131 will drag the contract lower to ₹129 and ₹127. On the other hand, if the MCX-Aluminium futures contract breaks decisively above ₹137, it can test ₹140 initially. A further break above ₹140 will then increase the likelihood of the contract extending its upmove towards ₹143 and ₹145 thereafter.

Global trend

The Aluminum (three-month forward) contract on the London Metal Exchange has come-off after making high of $1,936 per tonne on last Wednesday. The resistance around $1,920 seems to be holding well. As long as the contract trades below this resistance, a fall to $1,830 and $1,800 breaking below 1,860 is possible.

On the other hand, if the contract manages to sustain above $1,860, a range-bound move between $1,860 and $1,920 can be seen for some time.

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

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