Commodity Calls

MCX-Lead consolidates with a negative bias

Gurumurthy K BL Research Bureau | Updated on August 02, 2018 Published on August 02, 2018

The Lead futures contract on the Multi Commodity Exchange (MCX) has been stuck in a sideways range between ₹144 and ₹150 per kg for more than two weeks. The prolonged sideways consolidation leaves the near-term outlook unclear for the contract.

A decisive breakout on either side of ₹144 or ₹150 will decide the next move. A strong break above ₹150 can take the contract higher to the next key resistance level of ₹152 – the 100-week moving average. The MCX-Lead futures contract has to breach ₹152 in order to ease the downside pressure and turn the outlook positive. A strong break above ₹152 will then take the contract higher to ₹157 and ₹160 levels.

On the other hand, as long as the contract remains below the resistances at ₹150 and ₹152, the overall downtrend that has been in place since June will remain intact. A break below ₹144 can drag the contract lower to ₹140. Further break below ₹140 will then increase the likelihood of the contract tumbling to ₹135.

The bias on the chart remains negative. As such, the possibility is high of the contract breaking below ₹144 in the coming days.

Trading strategy

Medium-term traders who have taken short positions at ₹147 can hold it. Accumulate more short positions at ₹150 and ₹152. Retain the stop-loss at ₹155 for the target of ₹135. Revise the stop-loss lower to ₹145 as soon as the contract moves down to ₹141.

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

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