Commodity Calls

MCX-Lead continues to move sideways

Gurumurthy K BL Research Bureau | Updated on November 01, 2018 Published on November 01, 2018

The Lead futures contract on the Multi Commodity Exchange of India has been falling consistently over the last couple of weeks. After hitting a high of ₹156.4 per kg on October 15, the contract tumbled about 12 per cent to a low of ₹138.2. But, it has bounced from the lows and is currently trading at ₹144 per kg.

The MCX-Lead futures contract has been broadly range-bound between ₹137 and ₹157 over the last three months. The bounce from the low of ₹138.2 keeps the range intact. An immediate resistance is in the ₹145-₹147 region. Inability to breach this hurdle can drag the contract lower to ₹140 and ₹138 again. A break below ₹138 will see a test of ₹136 – the 200-day moving average support level. A further decisive break below ₹138 will then drag the contract lower to ₹130 or ₹129 in the coming days.

On the other hand, if the MCX-Lead futures contract manages to breach ₹147 decisively, the downside pressure will ease. Such a break will then take the contract initially higher to ₹151. A further break above ₹152 will then increase the likelihood of the contract extending its up-move to ₹155 and ₹157.

Trading strategy

Traders with a high risk appetite can go long on a break above ₹147. Stop-loss can be placed at ₹144 for the target of ₹155. Revise the stop-loss higher to ₹149 as soon as the contract moves up to ₹151.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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