Technical Analysis

MCX-Lead bounces from a key support

Gurumurthy K BL Research Bureau | Updated on March 14, 2019 Published on March 14, 2019

The lead futures contract on the MCX has been volatile in the past week. The contract fell 2.6 per cent in the initial part of the week and made a low of ₹143.6 per kg on Monday. However, the contract has reversed sharply higher from the low recovering most of the losses. It is currently trading at ₹147 per kg.

The bounce-back in the past week is technically significant as it has happened from the key ₹144-143 support zone. This leaves the near-term outlook bullish for the contract. The region around ₹144 will continue to provide support and limit the downside. As long as the contract trades above ₹144, a rally to ₹152 is likely in the near term. Inability to breach ₹152 can drag the contract lower to ₹147 and ₹145. But a strong break and a decisive close above ₹152 will boost the momentum. Such a break will then increase the likelihood of the contract targeting ₹158 and ₹159 in the coming weeks.

The 100-day moving average around ₹144 is a key support for the contract. The outlook will turn negative only if the contract declines decisively below this support. The next target is ₹140.

Global trend

The lead (3-month forward) contract on the LME has risen sharply after oscillating around $2,100 per tonne for most part of last week. The level of $2,100 will now act as a good support. As long as the contract trades above this support, an upmove to $2,200 is possible in the near term. A decisive break and close above $2,200 will be bullish. It will confirm the rounding bottom pattern visible on the chart. In such a scenario, a fresh rally to $2,400 can be seen over the medium term.

The bullish outlook will get negated if the LME-Lead contract declines below $2,100. The next target is $2,060.

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

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