The aluminium futures contract on the Multi Commodity Exchange (MCX) surged, breaking above a key resistance at ₹116 per kg in the past week. The contract sky-rocketed over 6 per cent to record an intra-week high of ₹120.7, but gave back some of its gains and closed the week at ₹117.4.

However, the contract has opened the week on a positive note and is trading around ₹118. The level of ₹116 which is the 61.8 per cent Fibonacci retracement level may now provide support for the contract and limit the downside in the near-term. A revisit of ₹120 and ₹121 looks likely this week. A strong break above ₹121 can take the contract higher to ₹123 or ₹125 there after.

Short-term traders with high risk appetite can go long on dips near ₹117. Stop-loss can be placed at ₹115 for the target of ₹121. Revise the stop-loss higher to ₹118 as soon as the contract moves up to ₹120.

On the global front, spot aluminium prices on the London Metal Exchange (LME) surged to an intra-week high of $1,778 per tonne before closing at $1,744.5. Key support is at $1,700 and the outlook will remain bullish as long as the metal trades above this level. A rise to $1,800 is possible in the coming week. The view will turn negative only if the prices decline below $1,600. The next targets will be $1,650 and $1,635.

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

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