Commodities

MCX-Aluminium can make fresh gains

Akhil Nallamuthu BL Research Bureau | Updated on December 02, 2020 Published on December 03, 2020

The December futures contract of Aluminium on MCX established an uptrend in early October as it began to rally from about ₹142. Nonetheless, the contract began to consolidate in November-end where it was fluctuating between ₹162 and ₹165.

However, on Monday, the contract broke out of the range, indicating that the uptrend has gained steam. Substantiating the bullish outlook, the daily relative strength index is showing a fresh uptick following the latest breakout. However, one need to be cautious as the indicator is approaching the over-bought territory even though there are no signs of a trend reversal. The moving average convergence divergence indicator on the daily chart remains in the positive territory. The price is well above the 21-day moving average.

 

Considering the current chart set-up, the contract can be expected to advance towards ₹170 in the near-term. A breakout of this level can potentially take the price to ₹175. In case of the contract undergoes correction, ₹165 can be the nearest support. Subsequent support is at ₹162. Notably, a breach of this level can turn the short-term outlook negative.

On the global front, the three-month rolling forward contract of aluminium on London Metal Exchange (LME) has recently breached the key barrier of $2,000 and hints at further appreciation on price.

Given the above factors, traders can be bullish and initiate fresh long positions in declines with stop-loss at ₹162 and look for a potential target of ₹175.

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Published on December 03, 2020
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