MCX-Aluminium hovers above a crucial support

Aluminium futures contract on the Multi Commodity Exchange (MCX) fell during last week breaking below the key support level of Rs 147 per kg. The contract tumbled about 3 per cent intra-week and made a low of Rs 143. The contract has however managed to bounce from this low and is currently trading at Rs 144.5 per kg.

A crucial support is at Rs 142.5 – the 200-day moving average. The contract is hovering above this support over the last couple of trading days. Whether the contract sustains above this support or not will decide the next move.

Traders can stay out of the market at the moment and wait until a clear trend emerges.

If the contract manages to sustain above the 200-day moving average support, a relief rally to Rs 147 is possible. A break above Rs 147 will ease the downside pressure. Such a break will then take the contract further higher to Rs 151 or Rs 152.

On the other hand, if the MCX-Aluminium futures contract fails to gain momentum in the coming sessions and break below the 200-day moving average support, it can come under more pressure. In such a scenario, the contract can fall to Rs 139 initially. Further break below Rs 139 will then increase the likelihood of the contract extending its fall to Rs 136 or even Rs 133 thereafter.

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

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