Commodity Calls

MCX-Aluminium bounces from a key base

Yoganand D BL Research Bureau | Updated on December 02, 2019

The December futures contract of Aluminium on the Multi Commodity Exchange of India is trading at around ₹133 a kg. Since encountering a key resistance at around ₹150 in May this year, the contract has been in an intermediate-term downtrend. However, the contract found support in the band between ₹128 and ₹130 in late October and started to move sideways in a broad range between ₹128 and ₹136 thereafter.

After testing a key support at around ₹130 in the past week, the contract is attempting the climb and trades at ₹133. Nevertheless, the contract faces a key resistance ahead at ₹136. A strong break above this barrier can take the contract higher ₹140 initially. A further break above this level can take the contract northwards to ₹143-145 band in the medium term. On the other hand, an emphatic fall below the significant support at ₹128 can drag the contract down to ₹125 in the short term. Immediate support is placed at ₹130 which can cushion the contract before it tests ₹128.

On the global front, the LME Aluminium has been trending upwards. The metal has been in a sideways consolidation phase in the band between $1,700 and $1,830 since May this year. After taking support at $1,734, the commodity has started to trend upwards in mid-November. Recently, it has breached a resistance at $1,775 levels. The metal could face a vital resistance ahead at $1,800 and then the upper boundary at $1,830 levels. A strong break above this hurdle can push the commodity price higher to $1,850 levels. Key support below $1,734 can drag the price down to $1,700.

Trading strategy

Both the domestic as well as the global Aluminium price are in a sideways consolidation phase, traders with a short-term, can go long an a strong rally above ₹136 with a fixed stop-loss.

Published on December 03, 2019

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