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The Lead futures contract on the Multi Commodity Exchange (MCX) has managed to bounce slightly higher in the past week. The contract made a low of ₹137 a kg last Friday and has reversed higher from there. However, the price action on the daily chart suggest that this bounce back move lacks strength. The contract has been hovering in a narrow range below the 200-day moving average since it broke this support on April 18. It has been stuck in the band between ₹136 and ₹142 since then. The contract is currently trading near the upper end of this range at ₹141.35. A strong break and a decisive close above ₹142 will ease the downside pressure. Such a break can take the contract higher to ₹145 or even ₹148 in the short term. The level of ₹148 is a significant trend-line resistance. A downward reversal from this level will keep the channel movement intact which has been in place since February. In such a scenario, the possibility is high of the contract falling to ₹145 and ₹143 levels thereafter.
On the other hand, if the MCX-Lead futures contract fails to break above the 200-day moving average resistance in the coming days, it can continue to remain under pressure. A downward reversal from this hurdle can take the contract lower to ₹136 once again. Further break below ₹136 will increase the likelihood of the contract extending its fall to ₹133 or ₹132.5 thereafter.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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