MCX-Aluminium retains its strength

The aluminium futures contract on the Multi Commodity Exchange (MCX) has been volatile in the past week. The contract surged to a high of ₹178.85 per kg on Thursday and fell-back sharply from there. The contract fell to a low of ₹160.95 on Friday and has reversed higher again from there. It is currently trading at ₹168 per kg.

Outlook bullish

Inability to break below ₹160 and a subsequent upward reversal from there signals that the contract retains its strength. Moreover, the contract is getting strong buying interest from the market at lower levels. The near-term outlook will remain bullish as long as the contract remains above ₹160. A revisit of ₹178 and ₹179 is likely in the coming days.

The bullish outlook will get negated if the MCX-Aluminium futures contract breaks below ₹160. Such a break can take the contract lower to ₹155 or ₹153. The level of ₹153 is a crucial support level for the contract. The outlook will turn bearish if the contract breaks below ₹155 decisively. In such a scenario, the MCX-Aluminium futures contract can tumble towards ₹148 or even lower levels.

Trade strategy

Since the contract has risen sharply in a short span of time, the possibility for a sudden reversal cannot be ruled out. So traders can stay out of the market for some time until a clear trade signal emerges.

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

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