Commodity Calls

Near-term outlook is negative for MCX-Aluminium

Gurumurthy K BL Research Bureau | Updated on May 28, 2018 Published on May 28, 2018

The Aluminium futures contract on the Multi Commodity Exchange (MCX) seems to be lacking strength. The contract rose to a high of ₹157.35 on Friday. However, it has failed to sustain higher and has come-off sharply from this high. The contract is currently trading at ₹152.5 per kg.

The price action on the chart suggest that the contract lacks fresh buyers to take it further higher. This leaves the near-term outlook negative. A fall to test the near-term support level of ₹149.5 is likely in the coming days. Whether the contract reverses higher from this support or not will decide the next move.

If it manages to reverse higher from ₹149.5, the downside pressure will ease. In such a scenario, a relief rally to ₹155 or ₹156 is possible.

However, the bias on the chart is negative which leaves the possibility high of the contract declining below ₹149.5 in the coming days. Such a break can drag the contract lower to ₹147 or even ₹144 over the short term.

Short-term traders with a high-risk appetite can go short on rallies at ₹154 and ₹155. Stop-loss can be placed at ₹157 for the target of ₹148. Revise the stop-loss lower to ₹152 as soon as the contract moves down to ₹150.

The outlook for the contract will turn positive only if the contract records a decisive close above ₹157. Such a close will pave way for a fresh rally to ₹165.

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

Published on May 28, 2018
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