MCX-aluminium futures bounce from a key support
The MCX-aluminium futures contract on the Multi Commodity Exchange (MCX) fell last week, breaking below the support at INR 124 a kg. However, the 21-week moving average at around INR 122 aided in halting the fall.
The contract made a low of INR 122.25 on Thursday and has reversed sharply higher from there on Monday. It is currently trading at around INR 124.
Immediate resistance is at INR 125. If the contract manages to surpass this hurdle, the downside pressure will ease. Such a break can take the futures contract higher to INR 128 initially. A further break above INR 128 will pave the way for a test of the crucial long-term resistance at INR 130.
On the other hand, if the contract fails to break above INR 125, it can remain range-bound between INR 122 and INR 125 for some time. A break below INR 122 can pull the contract lower to INR 121.5.
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This level of INR 121.5 is a crucial support to watch. If the contract manages to reverse higher from this support, the downside pressure may ease once again. In such a scenario, the contract can rise to INR 125 and INR 126 again.
But the contract may come under pressure if it breaks below this support decisively. Such a break may trigger a fresh fall to INR 119 or INR 118.5 going forward.
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