Commodity Calls

Near-term outlook mixed for MCX-Lead

Gurumurthy K BL Research Bureau | Updated on November 15, 2018 Published on November 15, 2018

The lead futures contract on the Multi Commodity Exchange (MCX) has been stuck in a narrow range between ₹138 and ₹147 a kg over the last three weeks. Within this range, the contract made a high of ₹145.3 on November 8 and has come off sharply from there, falling about 3 per cent. It is currently trading at ₹141 a kg.

The near-term outlook is mixed. Whether the contract manages to sustain above ₹138 or not will decide the direction of the next move. Traders can stay out of the market until a clear trend and trade signal emerges.

If the contract continues to trade above ₹138 and gains strength, an upmove to ₹145 and ₹147 is possible in the near term. Inability to breach ₹147 can pull the contract lower to ₹138 again. In such a scenario, the current ₹138-147 sideways range will remain intact for some more time. But if the MCX-Lead futures contract manages to breach ₹147 decisively in the coming days, the downside pressure would ease. Such a break can take the contract higher to ₹151 and ₹152 thereafter.

On the other hand, if the MCX-Lead futures contract declines below ₹138, the downside pressure would increase. The break can take the contract lower to ₹136. A further break below ₹136 will then increase the likelihood of the fall extending towards ₹132 and ₹130 over the short term.

Global trend

On the global front, lead prices at the London Metal Exchange has been range-bound for a prolonged period of time. The LME-Lead (three-month forward) has been stuck in a sideways range between $1,870 and $2,130 a tonne since August. It is currently trading at $1,953. Immediate resistance is at $2,025. A break above it can take the prices higher to $2,100. The contract will come under pressure if it makes a decisive close below $1,900. In such a scenario, a fall to $1,860 and $1,820 is possible.

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

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