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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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