Commodity Calls

Short-term view is negative for MCX-Lead

Gurumurthy K BL Research Bureau | Updated on October 11, 2018 Published on October 11, 2018

The Lead futures contract on the Multi Commodity Exchange (MCX) has broken the ₹142-₹152 per kg sideways range below ₹142 last week as expected. The contract which was hovering around ₹152 – the upper end of the range in the initial part of the week, fell sharply thereafter breaking below ₹142. The contract has tumbled over 7 per cent from the week’s high of ₹151.75 and is currently trading at ₹140 per kg.

The outlook is bearish. The ₹142-₹143 range and then the level of ₹145 will now serve as a strong resistance for the contract. Intermediate bounce to these resistance levels is likely to find fresh sellers coming into the market.

A fall to ₹136 or ₹135 is likely in the coming days. If the contract manages to bounce from the ₹136-₹135 support region, a relief rally to ₹140 or ₹142 can be seen. But if the MCX-Lead futures contract breaks below ₹135, the down-move can then extend to ₹132 or even ₹130.

The downside pressure will ease only if the contract manages to rise past ₹145 decisively. Such a break can take the contract higher to the ₹150-₹152 resistance region again. However, the outlook will turn positive only if the contract makes a decisive break above ₹152. But such a strong up-move looks unlikely at the moment.

Trading strategy

Traders with a high-risk appetite can go short at current levels and on rallies at ₹142. Stop-loss can be placed at ₹144 for the target of ₹132. Revise the stop-loss lower to ₹138 as soon as the contract moves down to ₹135.

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

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get

This article is closed for comments.
Please Email the Editor