MCX Aluminium faces crucial resistance ahead

The Aluminium futures contract on the Multi Commodity Exchange (MCX) witnessed a strong rally for the third consecutive week. The contract surged to a high of ₹145.95/kg and has come-off slightly from there. It is currently trading at ₹144.5.

There is a crucial long-term resistance in the band between ₹146 and ₹147. Whether the contract breaks above this hurdle or not will decide the next trend.

Inability to break above ₹147 can trigger a pull-back move to ₹141 in the coming days. If the contract manages to bounce again from ₹141, it can move up to ₹145 and ₹146 levels again. In such a scenario, a range-bound move between ₹141 and ₹147 can be seen for some time. But if the contract breaks below ₹141, the possibility of it falling further to ₹137 or ₹136 will increase.

On the other hand, if the contract breaks above ₹147 decisively in the coming days, it can gain fresh momentum. Such a break will increase the likelihood of the contract extending its current rally to ₹150 and ₹151 going forward.

Since the contract has risen sharply over the last three weeks, the possibility is high that it remains below ₹147 for some time. As such, traders can avoid fresh long positions.

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

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