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The aluminium futures contract on the Multi Commodity Exchange (MCX) extended its fall in the past week breaking below the support level of ₹149.5 per kg. The contract fell to ₹147.25 on Friday but has bounced up slightly from there. It is currently trading at ₹149/kg.
The level of ₹147 is a crucial support for the contract which is holding well as of now. Whether the contract manages to sustain above this support or not will determine the next move.
As such, the price action in the coming days will need a close watch to get a cue on the next move. Traders can stay out of the market until a clear trend emerges.
If the contract manages to sustain above ₹147, an upmove to ₹151 or ₹153 is possible in the coming days. Inability to breach ₹153 can drag it lower to ₹148 and ₹147 levels again.
In such a scenario, a range-bound move between ₹147 and ₹153 can be seen for some time. But a strong break above ₹153 will boost the momentum and will give an initial sign that the downtrend that has been in place since the first week of October has come to an end. Such a break will trigger a fresh rally to ₹158 and ₹160. It will also confirm the trend reversal.
On the other hand, if the contract declines below ₹147 in the coming days, it can fall to ₹145 or ₹144. A further break below ₹144 will increase the downside pressure. Such a break will then drag the contract lower to ₹140 or ₹138.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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