The January mini futures contract of Alumini (aluminium) on the MCX has been consolidating in a narrow range for the past few trading sessions. Since the recent trend is on the upside, possibility of price appreciating is more. But one should keep an eye on prolonged consolidation as it can result in profit booking that would result in reversal of trend.
The crossing over of 21-DMA to 50-DMA, has turned the medium-term trend positive. Corroborating this, the moving average convergence divergence indicator on the daily chart continue to exhibit considerable upside momentum. However, as the daily relative strength index is hovering in overbought territory traders should be cautious.
If the contract breaks out of the current trading range, it will face resistance within a short span at ₹143.2, where the 61.8 per cent Fibonacci retracement level of the previous bear trend coincides. Thus, for the rally to sustain, the contract should breach ₹143.2. Beyond that level, it can rally to ₹151.
On the other hand, if the contract faces price correction, ₹140.3 will act as a good support. But if price breaches that level, it might descend to ₹136.2 where the 50-day moving average coincides.
On the global front, the price of three-month rolling forward contract of Aluminium on the London Metal Exchange continues to consolidate between $1,788 and $1,835. But as price remains above the 21-day moving average, short-term outlook is positive. On the upside, $1,860 will act as a hurdle above $1,830. From current market price of $1,806, the contract has a support at $1,800, below which the support is at $1,780.
Trading strategy
Though the recent trend has been bullish, MCX-Alumini futures has been treading a sideways path of late. Thus, traders are advised to initiate fresh buy only if the resistance at ₹143.2 is taken out with a stop-loss at ₹136.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.