The aluminium futures contract on the Multi Commodity Exchange (MCX) was volatile in the past week. The contract fell to a low of ₹139 per kg initially on Tuesday last week and then reversed sharply higher from there.

However, this upward reversal was short-lived as it faced strong resistance around ₹145 and halted after making a high of ₹144.9 on Friday. The contract has come-off from this high and is currently trading at ₹143/kg.

Immediate outlook is not clear. Key support is at ₹140 and resistance is at ₹145. A breakout on either side of ₹140 or ₹145 will determine the next move.

Traders can stay out of the market until a clear trend emerges.

If the contract declines below ₹140, it can come under renewed selling pressure. In such a scenario, a fall to test the crucial support level of ₹137 is possible. If the contract manages to reverse higher from ₹137, a relief rally to ₹140 or even higher levels is possible. In that case, a broad range-bound move between ₹137 and ₹146 can be seen.

But if the contract breaks below ₹137 decisively, it can tumble to ₹132 or ₹131 on the back of profit booking.

On the other hand, if the contract manages to sustain above ₹140 in the coming days and breaks above ₹145 decisively, the downside pressure can ease. The contract can then target the next key long-term trend resistance level of ₹148.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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