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Last week, the Lead futures contract on the Multi Commodity Exchange (MCX) gained 2.6 per cent breaching a key resistance at ₹160 per kg.
However, the contract encountered another resistance at ₹165 and witnessed a corrective decline. The contract found support at ₹160 on Wednesday and began to rally. It is currently trading at ₹162.5/kg.
It has breached its 21- and 50-day moving averages and hovers well above them. Corrective decline can find support at around ₹160 once again in the near-term. An emphatic breakthrough of the immediate resistance at ₹165 can push the contract higher to ₹170.
Further breach of the significant resistance level of ₹170 is required to strengthen the uptrend and take the contract higher to ₹175 in the medium-term.
Traders with a short-term perspective can consider initiating fresh long positions only if the contract moves beyond ₹165 levels with a fixed stop-loss at ₹162.
But if the contract fails to breach above ₹165 and falls below the immediate support level of ₹160, it can bring back selling pressure. In that case, the contract can decline to ₹157 and ₹155 levels in the short-term.
It can continue to move sideways in a broad range between ₹155 and ₹165 for some time.
A conclusive break out of this sideways range will decide its medium-term.
Key supports below ₹155 are pegged at ₹152 and ₹150 levels.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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