Aluminium on MCX settled down -1.53% at 122.2 on profit booking as China's week-long Lunar New Year holiday drained the markets of liquidity and direction. After years of excess supply the global aluminium market may be turning a corner, as China seeks to cut capacity and the incoming Donald Trump administration ratchets up trade threats against the world’s largest producer of the lightweight metal. A glut of aluminium in recent years has decimated the US aluminium industry, where smelters were forced to shut down as Chinese imports rose. Now, after tackling excess capacity in coal and steel in 2016, there are signs Chinese authorities are turning their focus to aluminium, according to official and media reports. Personal income in the U.S. increased by slightly less than expected in the month of December, according to a report released by the Commerce Department. The report said personal income rose by 0.3 percent in December after inching up by 0.1 percent in November. With increases in the South and West offset weakening activity in the Northeast and Midwest, the National Association of Realtors released a report showing that pending home sales increased by much more than expected in the month of December. Last week the US launched a case at the World Trade Organisation targeted at the Chinese aluminium industry. It alleges that loans and subsidised energy in China enabled companies to sell primary aluminium at artificially low prices. Technically market is under long liquidation as market has witnessed drop in open interest by -10.11% to settled at 1334 while prices down -1.9 rupees, now Aluminium is getting support at 121.4 and below same could see a test of 120.6 level, And resistance is now likely to be seen at 123.6, a move above could see prices testing 125.

Trading Ideas:

Aluminium trading range for the day is 120.6-125.

Aluminium dropped on profit booking as China's week-long Lunar New Year holiday drained the markets of liquidity and direction.

For aluminium supply risks have moved back into focus, he added, although a lot of good news is already priced in.

Traders reported subdued activity because of some nervousness before the Federal Reserve's two-day meeting on monetary policy starting on Tuesday.