The aluminium futures (continuous contract) on the MCX (Multi Commodity Exchange) hit a high of ₹325.4 in March. However, ever since that occurred, the contract has been on a decline. By closing at ₹210.45 on Monday, it lost about 35 per cent from the peak of ₹325.4 indicating bearish sentiment.
For the past one month, the contract has been charting sideways, largely trading between ₹200 and ₹215. The next leg of the short-term trend depends on which direction the contract traverses upon.
On breaching the support at ₹200, it has l nearest support at ₹187 and the subsequent one is at ₹160. But, in case, if aluminium futures breaks out of ₹215, it can turn the near-term trend bullish, wherein the contract can rally to ₹235. If this resistance is invalidated, it can move towards the resistance band of ₹250-254. The 38.2 per cent Fibonacci retracement of the recent downtrend coincides at ₹250, making it a significant hurdle for the bulls to cross.
A rally beyond the above-mentioned resistance band is less likely. The contract is expected to begin the next leg of downtrend either at ₹235 or in the ₹250-254 price region.
Traders can stay on the fence now and consider fresh short positions if the support at ₹200 is breached or if the contract witnesses a corrective rally to ₹235 or ₹250.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.