The Lead futures contract on the Multi Commodity Exchange (MCX) has surged over 4 per cent in the past week. This rally has taken the contract well above the key resistance level of ₹137 per kg. It also marks the end of a sideways consolidation phase between ₹131 and ₹137 that had been in place for more than a month. Additionally, the surge in the past week signals the reversal of the strong downtrend that had been in place since February.
The contract is currently trading at ₹141.35 per kg. The level of ₹137 will now act as a good support. A rise to ₹144 or ₹146 is likely in the near term. Inability to break above ₹146 can trigger a pull-back move to ₹140 or ₹139. However, since the contract has formed a strong base in between ₹131 and ₹137, the downside is expected to be limited to ₹137 going forward. As such an eventual break above ₹146 is more likely in the coming weeks. Such a break will increase the likelihood of the contract rallying to ₹150 or even higher levels over the medium term.
Traders with a short-term perspective can wait for dips and go long at ₹139. Stop-loss can be placed at ₹135.5 for the target of ₹145. Revise the stop-loss higher to ₹140 as soon as the contract moves up to ₹142.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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