After hovering above ₹130 per kg in a narrow range, the Aluminium futures contract on the Multi Commodity Exchange of India (MCX) has risen last week. The contract gained about 3 per cent in the past week and is trading at ₹135 per kg.
The near-term outlook is positive. The contract can extend the current up-move to ₹138 in the near term. Key resistance is between ₹137.5 and ₹138. Inability to breach ₹138 can trigger a pull-back move to ₹134 or ₹133. A strong break and a decisive close above ₹138 is needed for the contract to gain fresh momentum. Such a break will then increase the likelihood of the MCX-Aluminium futures contract targeting ₹142 and ₹143.
A break and a rally to ₹142-₹143 will be bullish from a medium-term perspective. It will confirm an inverted head and shoulders pattern on the daily chart. The neck-line of this pattern is at ₹137 which will then serve as a strong support. The medium-term outlook will then turn bullish and the contract can rally to ₹150 or even higher in the coming weeks.
Trading strategy
Short-term traders can go long at current levels and also accumulate on dips at ₹133. Stop-loss can be placed at ₹131 for the target of ₹142. Revise the stop-loss higher to ₹137 as soon as the contract moves up to ₹139.
Global trend
After hovering around $1,850 for a few days, the Aluminium (3-month forward) contract on the London Metal Exchange (LME) has risen sharply over the last couple of days. The contract has surged about 3 per cent in the past week and is currently trading at $1,913. The outlook is bullish. The LME-Aluminium contract can rise further to $1,935 and $1,950 in the coming days. Inability to breach the resistance level of $1,950 can trigger a pull-back move to $1,900 and $1,880.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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.