The aluminium futures contract traded on the Multi Commodity Exchange (MCX) is gaining momentum. The contract has been surging higher over the last three consecutive weeks. Though it fell initially last week, the contract managed to reverse sharply higher from its intra-week low of ₹120.65 and close 2 per cent higher for the week. The contract has sky-rocketed 8 per cent in the past three weeks.

The contract is currently hovering around a key immediate resistance at ₹127. The price action on the daily chart suggest that there is a strong likelihood of the contract breaking above ₹127 in the coming days. Such a break can take the MCX-Aluminium contract to ₹130. The level of ₹130 is a crucial long-term resistance. Inability to break above this hurdle can trigger a corrective fall to₹125-₹123 or even ₹120 thereafter. But a strong break and a decisive weekly close above ₹130 may boost the bullish momentum. Such a break may open doors for the next long-term target of₹140.

Immediate support for the contract is at ₹124. The near-term view will turn negative only if the contract declines below this support. The ensuing target on such break will be ₹120 or ₹119. But the 21-day moving average diverging after touching the 55-day moving average on the chart signals that the uptrend is likely to remain intact. As such the contract is more likely to sustain above the immediate support at ₹124 in the coming week.

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

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