The Aluminium futures continuous contract on Multi Commodity Exchange of India (MCX) extended the short-term uptrend in that past week by gaining 2.4 per cent. So far this week, the contract has surged 1 per cent, trading at around ₹161. Since registering a low at ₹125.6 in late May this year, the contract has been on a medium term uptrend.
Moreover, it has been on a short-term uptrend from early October that accelerated last week. The now trades well above the 21- and 50-day moving averages. But currently hovers in the overbought territory as the daily relative strength index indicates.
Also, the weekly RSI features in the overbought territory implying a near-term correction is likely. The contract has a key resistance ahead at ₹165 which can probably limit the short term uptrend temporarily. A corrective decline from current levels or from ₹165 is on the cards.
Therefore, traders with a short-term perspective can consider booking profit partial at around ₹165 and stay watchful. That said, an emphatic break above ₹165 can take the contract northwards to ₹170 and then to ₹170 levels.
On the downside, a plunge below the immediate support level of ₹157 can drag the contract down to ₹152 and then to ₹150. A decisive fall below the vital base level of ₹150 will alter the short-term uptrend and drag the contract down to ₹147 and then to ₹144.
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