Commodity Calls

MCX-Aluminium hovers near a resistance

Akhil Nallamuthu BL Research Bureau | Updated on February 17, 2020

The spot price of Aluminium on the MCX, which rallied from ₹130 since the beginning of December, faced a hurdle and softened towards the end of January after registering a high of ₹149.65. The price declined to ₹135 in the first week of February and has been consolidating since then.

Like the spot price, the February mini futures contract of Aluminium, ie, Alumini on the MCX fell in the last week of January. The contract then bounced from the low of ₹134.7 and is currently trading near a hurdle at ₹139. The 21-DMA coincides at that level, making it a significant resistance.

The daily RSI is largely flat and is hovering around the mid-point level of 50. On the other hand, the MACD indicator on the daily chart is in the bear zone. But it has been flattening, as price started to consolidate.

On the back of resistance at ₹139, if the contract declines, the immediate support is at ₹136. Below that level, it can retest the prior low at ₹134.7. But if the contract attracts buying interests and breaks out of the resistance at ₹139, it can advance to ₹142 in the near-term. If it breaches that level, it can possibly rally to ₹148.

On the global front, the price of three-month rolling forward contract of Aluminium on the London Metal Exchange is facing resistance at $1,750, where 21-day moving average coincides. Until price remains below that level, the contract might continue to face selling pressure. On the downside, the supports are at $1,700 and $1,685.

Trading strategy

The contract has been inching up since the beginning of this month. However, it is currently facing a resistance at ₹139 and the overall trend remains bearish. Moreover, the price on the LME too is facing a resistance. So, traders can sell the current month contract with stop-loss at ₹143.

Published on February 17, 2020

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