Technical Analysis

Selling pressure likely in MCX-Aluminium

Akhil Nallamuthu | Updated on March 02, 2020 Published on March 03, 2020

The March Aluminium mini futures contract on the MCX, that is, Alumini, declined during the last week. After marking an intra-week low of ₹133.9 on Friday, the contract recovered sharply recouping most of its losses. Despite the rally, it remains below the 21- and 50-DMAs, retaining its short-term bearish outlook. As long as the contract trades below ₹140, a sustainable recovery is doubtful.

Substantiating the negative outlook, the MACD indicator on the daily chart stays in the bearish territory and the daily RSI, though showing a marginal uptick, remains below the mid-point level of 50 — indication of bearish bias.

If the recent rally in the contract gets extended and if the price rises, the nearest hurdle is at ₹140. A breakout of this level can lift the price further towards the resistance at ₹143. Above that level, the medium-term trend can become bullish. On the other hand, if the contract attracts renewed selling pressure, it is likely to retest its previous low of ₹133.9. A break below that level can drag the price to ₹130.




On the global front, the price of three-month rolling forward contract of primary aluminium on the LME declined and registered a three-year low of $1,665 on Friday. The contract lies below the 21-DMA and the price action on the daily chart hints at further decline in price. A fall from current level can drag the price to $1,650, below which it might drop to $1,615.

Trading strategy

Though the price of MCX-Alumini has been rallying during the last two trading sessions, the trend has not turned bullish. Also, oscillators are still in the bear zone and the contract price remains below the key moving averages, giving it a bearish inclination. So, traders can make use of the rally to initiate fresh short-positions with a stop-loss at ₹143.

Published on March 03, 2020

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