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The strong rally that was in place for more than two weeks in the Lead futures contract on the Multi Commodity Exchange (MCX) halted in the past week. The contract made a high of ₹164 a kg on Tuesday and has come off slightly from there. It has been stuck in a narrow range between ₹160 and ₹164 since then.
Technically, a key trend resistance at ₹164 has halted this rally. A further upward move is possible only if the contract surpasses this hurdle decisively. In such a scenario, the possibility of the contract rallying to ₹170 and ₹175 thereafter will be higher.
On the other hand, if the MCX Lead futures contract continues to trade below ₹164, it can break below ₹160 and dip to ₹159 or ₹158 in the near term. The level of ₹158 is a crucial short-term support. A bounce from this support may push the contract higher to ₹164 again. In such a scenario, a range-bound move between ₹158 and ₹164 is possible for some time.
But if the contract breaks below ₹158 decisively, the outlook will turn bearish. Such a break can drag the contract lower to ₹155 or even lower thereafter.
Traders can wait on the sidelines at the moment. Watch the price action in the coming days for a cue on the next movement and get a clear trade signal.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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