Commodity Calls

Near-term outlook is mixed for MCX-Lead

Gurumurthy K BL Research Bureau | Updated on September 06, 2018 Published on September 06, 2018

The lead futures contract on the Multi Commodity Exchange (MCX) has been trading volatile over the last week.

The contract broke above the key ₹148-₹149 resistance to record a high of ₹151.65 per kg on Monday. But it failed to sustain the momentum and reversed sharply lower. The contract tumbled 3.6 per cent to make a low of ₹146.15 per kg on Wednesday. However, the contract has bounced-back recovering some of the loss and currently trades at ₹149 per kg.

The volatile move in the past week keeps the near-term outlook mixed for the contract. Key supports are at ₹146 and ₹144.5 (21-day moving average) while significant resistance is in the ₹151-₹152 region. The MCX-Lead futures contract can remain range-bound between ₹144 and ₹152 in the near term. A break-out on either side of ₹144 or ₹152 will then decide the next direction of move.

A strong break below ₹144 will bring fresh selling pressure on the contract. Such a break will increase the likelihood of the contract tumbling to ₹140 or even ₹138 thereafter.

On the other hand, the MCX-Lead futures contract will have to breach ₹152 decisively to gain fresh momentum. Such a break will ease the downside pressure. It will then increase the possibility of the contract rallying to ₹155 and ₹157.

Such a rally to ₹155 and ₹157 will also signal the reversal of the downtrend that has been in place since June. A decisive break and close above ₹157 will confirm the trend reversal.

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

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