Technical Analysis

MCX-Aluminium continues to stay flat

Akhil Nallamuthu BL Research Bureau | Updated on April 20, 2020 Published on April 20, 2020

The April futures contract of Aluminium mini, that is, Alumini on the MCX has been in a sideways trend for a month. The contract has been oscillating between ₹132.6 and ₹135.2.

For the year, the contract has softened by about 2.2 per cent and is currently trading near the lower boundary of the consolidation range. As long as the contract fluctuates within these levels, the next leg of trend cannot be confirmed.

Following the price action of the contract, the RSI and MACD indicator on the daily chart stays flat. But the RSI is below the midpoint level of 50 and the MACD is in the negative territory. Also, the price remains below the 21-DMA. These factors signal a bearish bias.

If the contract breaches the lower limit of the range at ₹132.6, it might retest the previous low at ₹128.2. A break below that level can drag the contract to ₹125. On the other hand, the upper boundary of the range, that is, ₹135.2 along with the 50-DMA at ₹136.3 has formed a resistance band. If the contract manages to breakout of these levels, it can rally to ₹140. Subsequent resistance is at ₹143.7.

On the global front, the price of three-month rolling forward contract of primary aluminium on the London Metal Exchange has been gradually recovering over the past week. The price has moved above the important level of $1,500. If the contract can sustain at these levels, the price might rise further. But if the contract resumes downswing on the back of the major downtrend, it can weigh on the MCX contract as well.

Trading strategy

The futures contract in MCX continues to chart a sideways trend. So, traders are recommended to hold back fresh positions until price remains within ₹132.6 and ₹135.2. Traders can sell the contract if it slips below ₹132.6; place stop-loss at ₹135.2.

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

Published on April 20, 2020

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