The lead futures contract on the Multi Commodity Exchange has been stuck in a narrow sideways range over the last few weeks. The contract has been rangebound between ₹138 and ₹148 for about a month now. It is currently trading at ₹141.

The near-term outlook is mixed for the contract. A breakout on either side of ₹138 or ₹148 will determine the direction of the next move.

A strong break below ₹138 will increase the downside pressure. Such a break will bring fresh sellers into the market. It will also indicate the resumption of the broader downtrend that has been in place since June. In such a scenario, a fall to ₹130 is possible in the coming weeks.

On the other hand, if the MCX-Lead futures contract manages to sustain above ₹138 and breaks above ₹148 in the coming days, the downside pressure will ease. The contract can then move up initially to ₹151. A further break above ₹151 will then increase the likelihood of the contract moving up towards ₹153 and ₹155 thereafter.

The region around ₹155 is a crucial resistance for the contract. A strong break and a decisive close above ₹155 is needed to turn the outlook completely positive.

The price action on the weekly charts leaves the bias positive. The long wicks on the downside indicates that the contract is getting strong buying interest around ₹138. This leaves the possibility high of the contract breaking the current range above ₹148 in the coming days.

Trading strategy

Traders with a medium-term perspective can go long at current levels and also on dips near ₹139.5 and ₹138.5. Stop-loss can be placed at ₹133 for the target of ₹155. Revise the stop-loss higher to ₹143 as soon as the contract moves up to ₹145.

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

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