MCX-Aluminium (₹141.7)
The August futures contract of Aluminium on Multi Commodity Exchange (MCX) is in a short-term uptrend. But, the contract currently tests a key resistance at ₹142. Since early June this year, the contract has been broadly consolidating sideways in the band between ₹137 and ₹142. To decide the next leg of the trend, the contract needs to decisively move out of this range on either side.
An upwards breakthrough of ₹142 will pave way for an up-move to ₹145 and then to ₹150 over the medium term. If the contract fails to move beyond ₹142, the sideways movement will remain in place for a while. The Relative Strength Index (RSI) on the daily chart is hovering in the neutral region.
On the downside, a strong plunge below ₹137 will bring back bearish momentum and pull the contract down to ₹134 and then to ₹132. Next key support is at ₹130.
On the global front, the price of three-month rolling forward contract of primary aluminium on London Metal Exchange (LME) has been in a medium-term uptrend since mid-May this year.
Also, the short-term trend is up, while trending up the contract had breached a key barrier at $1,660 recently. It faces a key resistance ahead at $1,700; a breakout can take the contract higher to $1,750 over the medium term. Supports are at $1,660 and $1620.
Trade strategy
The MCX contract is range-bound with an upward bias; the global price trend of LME contract can drive it higher. That said, the MCX-Aluminium has a vital resistance at ₹142. Hence, traders can initiate fresh long positions on a decisive break ₹142 with a stop-loss at ₹139.