The Aluminium futures contract on the Multi Commodity Exchange is trading volatile. The contract tumbled from a high of ₹136.2 a kg on September 4 to make a low of ₹132.3 on Wednesday. The contract has been trading volatile by moving up and down between ₹132 and ₹135 since then. It is currently trading at ₹134.85 . Technically, the 21-day moving average and a trend line support around ₹132.5 is providing support for the contract and is limiting the downside.

The contract is stuck in a sideways range between the support at ₹132.5 and resistance at ₹135. A breakout on either side of these levels will determine the next move. Traders can stay out of the market until a clear trend emerges.

The contract will gain fresh momentum if it breaks and close above the immediate resistance at ₹135 decisively. Such a break will pave way for a rally to ₹140 in the coming days. Inability to break above ₹140 can pull the contract lower to ₹137 and ₹135 again. But a strong break above ₹140 will increase the possibility of the contract extending its rally to ₹143 levels thereafter.

On the other hand, if the contract fails to break above ₹135, a range bound move between ₹132.5 and ₹135 is possible for some time. A strong break and a decisive close below ₹132.5 may leave the contract under pressure. Such a break can take the MCX-Aluminium futures contract lower to ₹130.5 initially. Further break below ₹130.5 will increase the likelihood of the fall extending to ₹129 or even ₹127.5 thereafter.

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

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