The Aluminium futures contract on the Multi Commodity Exchange (MCX) fell sharply, as expected in the past week, breaking below the key 100-day moving average support level of ₹133 per kg. The contract hit a low of ₹130.4 on Thursday but bounced back from there. It is currently trading at ₹133.35/kg.
Immediate support is at ₹132. If the contract manages to sustain above this support, a rise to test the resistances at ₹135.5 or ₹136 — the 21-day moving average — is possible in the coming days.
The downside pressure will ease only if the contract breaks above ₹136 decisively. Such a break can take the contract higher to ₹138 or ₹138.5 initially. Further break above ₹138.5 can boost the momentum. In that scenario, the possibility of the contract rallying to ₹142 and ₹143 levels will increase.
On the other hand, if the contract fails to break above the ₹135.5-136 resistance region and reverses lower, it can come under pressure again. This will reiterate the downtrend since November. In that case, the contract can fall to ₹131 and ₹130 again.
Traders with a high-risk appetite can go short on a reversal from ₹136. Stop-loss can be placed at ₹138 for a target of ₹132. Revise the stop-loss lower to ₹135 as soon as the contract moves down to ₹134.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.