The Lead futures contract on the MCX is continuing to trade in a sideways range. The contract has been stuck between ₹135 and ₹145 per kg for more than a month now. Within this range, the contract fell to a low of ₹135.3 on Friday last week and has been inching higher from there. The contract has bounced over 3 per cent from the low and is currently trading at ₹139.5 per kg.
Sideways range intact
The sideways range movement remains intact. As long as the contract trades above ₹135, there is a strong likelihood of it moving up towards ₹143 and ₹145 — the upper end of the range in the coming weeks. Intermediate resistance is at ₹140. A break above it will pave way for ₹143 and ₹145.
A breakout on either side of ₹135 or ₹145 will determine the direction of the next move. Traders can stay out of the contract until a clear trend emerges.
The outlook will turn bullish if the MCX-Lead futures contract breaks above ₹145 decisively. Such a break will increase the likelihood of the contract rallying towards ₹150.
On the other hand, if the contract breaks below ₹135, it can fall to ₹133 initially. A bounce from ₹133 can trigger a corrective rally to ₹137. But a further break below ₹133 will drag the contract lower to ₹130 or ₹128 thereafter.
Global trend
The Lead (three-month forward) contract on the London Metal Exchange is retaining its $1,900-2,100 per tonne sideways range. Within this range, the contract made a low of $1,932 on January 3 and has reversed higher from there. It is currently trading at $1,971.
Immediate resistance is at $2,000. A break above it can take the contract higher to $2,070 and $2,100. But a pull-back from $2,000 can drag the contract lower to $1,900 levels again.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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