Commodity Calls

MCX-Aluminium is stuck in a narrow range

Gurumurthy K | Updated on January 09, 2018


The Aluminium futures contract on the Multi Commodity Exchange is stuck in a narrow range between ₹131 and ₹135 a kg for more than a week now. This leaves the immediate outlook unclear for the contract. A breakout on either side of ₹131 or ₹135 will determine the next trend for the contract. Traders can stay out of the market until the range breakout gives out a clear trade signal.

If the contract breaks below ₹131 decisively, it can come under pressure. Such a break can trigger a sell-off on the back of profit booking. Since the contract has risen sharply in a short span of time, such a break can drag it to ₹128 initially. Further break below ₹128 will increase the likelihood of the contract extending its fall to ₹125 or ₹124. Short-term traders with high risk appetite can go short if the contract breaks below ₹131 decisively. Stop-loss can be placed at ₹133 for the target of ₹128. Revise the stop-loss lower to ₹130 as soon as the contract moves down to ₹129.

On the other hand, if the MCX-Aluminium futures contract manages to sustain above ₹131, it can continue to remain range bound between ₹131 and ₹135 for some more time. An eventual break above ₹135 will then pave way for a fresh rally to ₹140 or even ₹145 over the medium-term.

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

Published on August 28, 2017

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