Commodity Calls

MCX-Lead is stuck in a sideways range

Gurumurthy K BL Research Bureau | Updated on February 21, 2019 Published on February 21, 2019

The Lead futures contract on the Multi Commodity Exchange of India (MCX) had been volatile in the past week. The contract rose to a high of ₹148.65 on February 15 and fell sharply erasing all the gains. It made a low of ₹143 on Wednesday and has once again bounced up slightly from there. The contract is currently trading at ₹144 per kg.

The contract has been oscillating between the 100- and 200-day moving average levels of ₹143 and ₹148 respectively over the last couple of weeks. A breakout on either side of ₹143 or ₹148 will determine the direction of the next move. Traders can stay out of the market until a clear trend emerges.

A break below ₹143 will bring renewed pressure on the contract. Such a break can drag the MCX-Lead futures contract lower to ₹139 in the short term on the back of fresh selling.

 

On the other hand, if the contract manages to sustain above ₹143, an up-move to ₹148 is likely in the near-term. A strong break above ₹148 will boost the momentum and will take the contract higher to ₹153 and ₹155.

Global Trend

The Lead (3-month forward) contract on the London Metal Exchange (LME) was volatile in the past week. The contract fell sharply from a high of $2,084.5 per tonne on February 15 to make a low of $2,013 on Wednesday. But it has bounced up slightly from the low and is currently trading at $2,041 per tonne.

The psychological support level of $2,000 is holding well as of now. As long as the LME-Lead contract trades above $2,000, the outlook will be positive. A rally to $2,000 and $2,150 is possible in the short term.

The level of $1,985 is a crucial support. The outlook will turn negative only if the contract declines below this support. The next targets are $1,930 and $1,900.

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

 

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