Portfolio

MCX-Aluminium trading near key demand zone

Akhil Nallamuthu BL Research Bureau | Updated on September 24, 2019 Published on September 23, 2019

During the previous week, the September futures contract of Aluminium on the Multi Commodity Exchange depreciated to a low of ₹138.55 from ₹140.35 a kg before closing for the the week at ₹138.75 on Friday. The contract experienced bear hammering after recording an intra-week high of ₹141.65, where 21-day moving average acts as a resistance.

The contract opened on a flat note at ₹138.55 on Monday. It then slid to make an intra-day low of ₹138.05. Currently, it tests a key support area between ₹137.8 and ₹138. If the futures contract attracts buying, , it may appreciate towards a crucial resistance in the band between ₹139 and ₹139.25. A breakout beyond these levels will take the contract price towards ₹140 over the medium term. However, if current support could not hold, the contract may come under more selling which could drag down the price to ₹135.

Global trend

After breaking an important level of $1,800, three months rolling forward contract in London Metal Exchange could not rally further and declined to a low of $1,765. During the previous week, the contract opened at $1,810 and registered a low of $1,765 before closing the week at $1,795, though it was largely trading between $1,780 and $1,800.

Since the price has bounced up from $1,765 levels twice, the contract seems to have formed a higher base indicating some buying interest. Hence, trading beyond $1,800 will most likely take the contract towards $1,860. However, if the contract faces more selling at $1,800 area, the price could be dragged down towards $1,765, below which the price might re-test the earlier low at $1,755 level.

Trade strategy

The contract seems to be moving sideways between key levels at ₹139.25 and ₹137.8. Hence, from the perspective of trading it is advocated to wait until the price decisively breaks either of the level.

Published on September 23, 2019
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