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
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.