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The aluminium futures contract on the Multi Commodity Exchange reversed sharply higher in the past week.
The contract made a low of ₹130.7 per kg on August 28 and has risen sharply by about 4 per cent from there. It is currently trading at ₹135.25 per kg.
The rally in the past week has taken the contract well above the key resistance level of ₹134.5. The outlook will remain bullish as long as the contract sustains above the support at ₹134.5. Above ₹134.5, there is a strong likelihood of the contract rallying to ₹140 in the coming days.
Inability to break above ₹140 can trigger a corrective fall to ₹135 thereafter. But if the MCX-Aluminium futures contract manages to surpass the hurdle at ₹140 decisively, the upmove can then extend to ₹145 over the medium term. But as the contract has been on a continuous surge since the second week of August, a corrective fall after testing ₹140 looks evident.
On the other hand, if the contract declines below the immediate support at ₹134.5, it can fall to ₹131 and ₹130 again. A range bound move between ₹130 and ₹135 is likely in such a scenario. A break below ₹130 can increase the downside pressure and drag the contract lower to ₹128 initially. Further break below ₹128 will then increase the possibility of the downmove extending to ₹125 levels thereafter.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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