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The aluminium futures contract has been stuck in a narrow range over the last one week. In the Multi Commodity Exchange (MCX), the contract has oscillated between ₹199 and 202.50 per kg during this period. The contract is currently trading at ₹201 per kg.
Outlook
The short-term outlook is unclear. Immediate resistance is at ₹202.50 – the upper end of the range. Above that, ₹203.20 and ₹204.80 are the next important and higher resistances.
MCX Aluminium contract has to break above ₹204.80 decisively in order to ease downside pressure. Only in that case would the outlook turn bullish convincingly. Such a break can then take the contract up to ₹207-₹207.50 in the coming weeks.
On the other hand, supports are at ₹199 – the lower end of the range – and ₹198.40. A decisive break below ₹198.40 will increase the downside pressure. Such a break will be bearish to see ₹196 initially. A further break below ₹196 could then drag the contract down to ₹193.50-₹193.
Overall, it is a wait-and-watch situation for now. The possible range of trade could be ₹199-₹202.50 (narrow) or ₹198.40 to ₹204.80 (broad). A break-out on either side of ₹198.40 or ₹204.80 will bring clarity on the next leg of move.
Trade Strategy
Traders can stay out of the market for now. Wait for a break-out on either side of ₹198.40 or ₹204.80. Trades can then be taken accordingly.
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