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The aluminium futures contract on the Multi Commodity Exchange continued to hover in a narrow range above a key support level of ₹121 a kg. After falling over 1 per cent on June 5, the contract had been stuck between ₹121 and ₹123.5 for the rest of the week. It is currently trading at ₹121.8 per kg.
Whether the contract breaks below ₹121 or not will decide the next move. A break below ₹121 can take it lower to ₹119.5 or ₹119. If the contract manages to bounce from around ₹119, it can rise to ₹121 or ₹122 once again. But a decisive break below ₹119 will increase the likelihood of the fall extending to ₹116 or even ₹115.
On the other hand, if the MCX-Aluminium futures contract manages to stay above ₹121 in the coming days and breaks above ₹123 decisively, a rise to ₹124 or ₹124.5 is possible. A cluster of moving average resistances are poised in the band between ₹124 and ₹124.5.
A failure to breach above ₹124.5 may trigger a pull-back move to ₹121 once again. In such a scenario, the contract may remain range-bound between ₹121 and ₹124.5 for some time.
But if the contract breaches above ₹124.5 decisively, it will ease the downside pressure. Such a break will enhance the possibility of the contract rallying to ₹127.3 thereafter.
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