WEEKLY OUTLOOK. Near-term view is negative for MCX Aluminium

Gurumurthy K Updated - January 09, 2018 at 04:26 AM.

Aluminium ingots are seen outside a warehouse that stores London Metal Exchange stocks in Port Klang Free Zone, outside Kuala Lumpur, March 23, 2015. Malaysia's customs agency hopes to reach an agreement soon with the London Metal Exchange, after the LME threatened to stop registering new metal in the country if the new Malaysian Goods and Services tax, due to take effect next month, was levied in two bonded zones there, a customs official said. Malaysia is a major storage point for LME metals, holding more than 430,000 tonnes, including nearly half of the LME's nickel stocks, 85 percent of its tin, a third of its lead and almost a fifth of its copper inventories. REUTERS/Olivia Harris

The Aluminium futures contract on the Multi Commodity Exchange (MCX) shows signs of weakness.

The contract has declined below a key support level of ₹136 akg which was limiting the downside for more than a month. The contract made a high of ₹138.55 on Thursday and reversed lower sharply breaking below ₹136. It is currently trading at ₹135.

Immediate resistance is in the ₹136-₹137.5 region which is likely to cap the upside in the near term. Intermediate bounce to this resistance zone may find fresh sellers coming into the market.

Short-term traders with a high-risk appetite can go short on rallies at ₹136. Stop-loss can be placed at ₹138 for the target of ₹132. Revise the stop-loss lower to ₹135 as soon as the contract moves down to ₹133.5.

A fall to test ₹132.5 – the 100-day moving average or ₹131.80 – the 50 per cent Fibonacci retracement support is likely in the near-term. If the contract manages to reverse higher from either of these support, a relief rally to ₹135 or ₹136 is possible.

On the other hand, if the contract declines below ₹131.8, it can fall to ₹131 and ₹130. Further break below ₹130 will increase the possibility of the down move extending to ₹128. Cluster of supports are poised in the range between ₹132 and ₹130.

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

Published on November 20, 2017 16:52