The lead futures contract on the MCX tumbled breaking below the key support level of ₹147 per kg in the past week. The contract fell sharply by about 4 per cent intraweek and made a low of ₹142.25 on Wednesday. But, it has bounced up slightly from there and is currently trading at ₹144 per kg.
A key resistance is at ₹146 which can be tested if the contract continues to trade above ₹142. But a break above ₹146 looks less likely as fresh sellers are likely to emerge at higher levels. A pull-back once again from ₹146 will trigger a fall to ₹142 and ₹140-139 band over the short-term.
The region between ₹140 and ₹139 is a strong support which may halt the current down-move. A strong bounce from this support zone will signal the beginning of a fresh leg of up-move from a medium-term perspective.
Medium-term traders can wait for a dip and go long at ₹141. Stop-loss can be placed at ₹137 for the target of ₹151. Revise the stop-loss higher to ₹142 as soon as the contract moves up to ₹144.
Global Trend
The lead (three-month forward) contract on the LME fell sharply in the past week breaking below the key support level of $2,070. The contract has declined about 3 per cent in the past week to $2,020 from $2,080.
The near-term view remains negative. A fall to test the next support in the $1,990-1,980 region is likely in the near-term. Whether the contract manages to bounce from this support or not will decide the next move.
A bounce from the $1,990-1,980 can trigger a relief rally toward $2,070. But a strong break below $1,980 will see the downtrend extending towards $1,950 and $1,925.
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