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The Aluminium futures contract on the Multi Commodity Exchange (MCX) has been stuck in the range between ₹140 and ₹145 for more than two weeks. The contract has been volatile within this range.
The outlook continues to remain unclear for the contract. Traders can continue to stay out of the market until a clear trade signal emerges.
A breakout on either side of ₹140 or ₹145 a kg will determine the next trend. The contract will come under pressure if it breaks below ₹140.
Such a break can pull the contract lower to ₹137 – a crucial short-term support level. If the contract manages to bounce from this support, the downside pressure may ease.
A relief rally to ₹140 can be seen in such a scenario. But a break below ₹137 will increase the selling pressure. In that case, the contract can fall to ₹131.
On the other hand, if the contract sustains above ₹140 and breaks above ₹145 in the coming days, it can gain momentum.
Such a break will see the contract rallying towards ₹147 and ₹148.
Since the contract has been stuck in a sideways range, the upmove after breaking above ₹145 could be swift and sharp.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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