The aluminium futures contract on the Multi Commodity Exchange (MCX) is showing signs of the downtrend getting reversed.

The contract fell sharply after spiking to a high of ₹137.25 in the past week. But this down move had lost momentum over the last few days and the contract is bouncing back after testing ₹134 per kg on Monday. The contract is currently trading at ₹135.6.

The price action on the chart is showing sign of an upward reversal. Key support is in the ₹134-133 zone. The 200-day moving average and a long-term trend-line supports poised in this zone which makes it a strong support for the contract.

A strong up move from current levels will indicate the end of downtrend that has been in place since February. As long as the contract sustains above ₹133, an up move to ₹137 is possible in the coming days. A break above ₹137 will confirm the trend reversal and will then increase the likelihood of the up move extending to ₹140 and ₹142 levels.

Traders with a medium-term perspective can go long at current levels. Stop-loss can be placed at ₹132 for the target of ₹141.

Revise the stop-loss higher to ₹134 as soon as the contract moves up to ₹137.

The contract will come under renewed pressure only if it breaks below ₹133.

Such a break will then increase the likelihood of the contract tumbling towards ₹130 and ₹129.

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

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