Technical Analysis

Upmove gains momentum in MCX-Aluminium

Gurumurthy K BL Research Bureau | Updated on January 21, 2019 Published on January 21, 2019

The Aluminium futures contract on the Multi Commodity Exchange has risen sharply breaking above the key resistance level of $131 — the 21-day moving average. The strong surge above this hurdle has triggered the stop-loss on the short positions recommended last week. The contract is currently trading at ₹133 per kg.

The region between ₹131 and ₹130 will now act as a strong support for the contract. The contract is likely to extend its upmove and test ₹135 in the near term. Inability to breach ₹135 can trigger a pullback move to ₹133 and ₹132. But a further break above ₹135 will then increase the likelihood of the contract extending its rally towards ₹137 and ₹138. The region around ₹137 and ₹138 is a crucial resistance zone where a key trendline and the 100-week moving average are in place. The price action around this resistance region will need a close watch. A strong break above ₹138 will pave way for the next targets of ₹140 and ₹145.

High risk appetite traders can go long on dips at ₹132 and ₹131. Stop-loss can be placed at ₹129 for the target of ₹138. Revise the stop-loss higher to ₹133 as soon as the contract moves up to ₹134.5

Global trend

The Aluminum (three-month forward) contract on the LME dipped as expected to test the key support level of $1,800 per ounce last week. The contract has however, reversed higher from this support and is currently trading at $1,870 per ounce. Immediate resistance in the $1,885-1,890 region is likely to be tested in the near term. A strong break above $1,890 can take the contract higher to $1,915. A further break above $1,915 will then increase the likelihood of the contract extending its rally towards $1,975 and $2,000.

On the other hand, if the LME contract reverses lower from $1,890 it can dip to $1,800 again.

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

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