Commodity Calls

MCX-Lead trades in a narrow range

Gurumurthy K BL Research Bureau | Updated on January 17, 2019 Published on January 17, 2019

The Lead futures contract on the Multi Commodity Exchange of India (MCX) inched higher in the initial part of last week but failed to sustain the momentum. The contract made a high of ₹141.2 a kg on Tuesday and has come off slightly from there. It is currently trading at ₹139 per kg.

The contract has been stuck in a narrow range between ₹139 and ₹141 over the last few days. Though the 21-day moving average is providing support, the contract is not gaining strength to breach the resistance at ₹141. This leaves the near-term outlook unclear.

A decisive breakout on either side of ₹139 or ₹141 will determine the direction of the next move. Traders can stay out of the market until a clear trend emerges.

A break below ₹139 can drag the contract lower to ₹135. If the MCX-Lead futures contract manages to bounce from ₹135, an upmove to ₹140 and ₹141 is possible. But a break below ₹135 will increase the likelihood of the down-move extending towards ₹133 or even lower.

On the other hand, the MCX-Lead futures contract will get a breather if it breaks above ₹141. Such a break can take the contract initially higher to ₹143 – the 21-week moving average resistance. A pull-back from this resistance can drag the contract lower to ₹140 and ₹135 again. But a strong break and a decisive close above ₹143 will turn the outlook bullish. The next targets are ₹150 and ₹152.

Global trend

The Lead (3-month forward) contract on the London Metal Exchange (LME) is not gaining strength to breach the psychological level of $2,000. The contract has been hovering in a narrow range between $1,950 and $2,000 in the past week.

Inability to breach $2,000 and a break below $1,950 can take the contract lower to $1,900. On the other hand, the contract will gain fresh momentum only if it breaks above the $2,000-$2,010 resistance region. Such a break can will then pave way for the next targets of $2,070 and $2,100.

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

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