Near-term outlook is mixed for MCX-Lead

Gurumurthy K Updated 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.

Published on September 06, 2018