MCX Aluminium hovers above major support
The aluminium futures contract on the Multi Commodity Exchange (MCX) fell over 3 per cent to close at INR116.85 per kg in the past week.
However, the contract has begun this week on a slightly positive note and is currently trading at INR117.5.
A key support is at INR116.2. If the contract breaks below this support decisively it can extend the fall to INR114 this week. The level of INR114 is a strong support and a possibility of a reversal from there cannot be ruled out. Such a reversal can take the contract higher to INR116 or INR117.5 thereafter.
On the other hand, if the aluminium futures contract manages to sustain above the support at INR116.2 in this week it can bounce to INR119.25 initially.
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A further break above INR119.25 will see the upmove extending to INR122.5. In such a scenario, a range-bound move between INR116 and INR122.5 can be seen for some time.
A break out on either side of this range will then decide the next leg of move for the contract.
Short-term traders with a high risk appetite can go long if the contract reverses higher from INR116.2. A stop-loss can be placed at INR115 for the target of INR118.5. Revise the stop-loss higher to INR117 as soon as the contract moves up to INR117.5.
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