The Aluminium futures contract on the Multi Commodity Exchange of India (MCX) has been consolidating sideways over the last one week. The contract has been stuck in a narrow range between ₹143 and ₹147 per kg. Within this range, the contract is currently trading at ₹146.5 per kg.

The near-term outlook is unclear. A breakout on either side of ₹143 or ₹147 will determine the next move. Traders can stay out of the market until a clear trend signal emerges.

If the contract manages to sustain above ₹143 and breaks above ₹147, the downside pressure will ease. Such a break will take the contract initially higher to ₹149 or ₹150. A further break above ₹150 will then increase the likelihood of the contract extending its rally to ₹153 or ₹155 over the short term.

On the other hand, if the MCX-Aluminium futures contract breaks below ₹143, it can fall to ₹140 or ₹138 in the near term. If the contract manages to bounce from the ₹140-₹138 support zone, a corrective rally to ₹143 is possible. But a break below ₹138 will increase the downside pressure and will drag the contract lower to ₹135 over the short term.

The level of ₹135 is a crucial medium-term support for the contract. As such the price action around ₹135 will need a close watch which might give a cue on the next trend. A strong bounce from ₹135 will signal the end of the current downtrend that has been in place since October. It will also mark the beginning of a new leg of upmove.

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

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