Technical Analysis

MCX-Lead tests a key barrier

Yoganand D BL Research Bureau | Updated on December 27, 2018 Published on December 27, 2018

The Lead futures contract on the Multi Commodity Exchange of India has been trading in a narrow range between ₹136 and ₹140 per kg over the past one week.

With a gain of 0.8 per cent, the contract was hovering at ₹140.15 per kg, testing the upper end of the range on Thursday. A strong rally above this resistance level can take the contract higher to ₹143 and then to ₹145 in the short term. A strong break above the key resistance level of ₹145 will reinforce the bullish momentum and take the contract northwards to ₹150 over the short- to medium-term horizon.

On the other hand, the contract has an immediate support at ₹136 and a fall below this level can drag the contract down to ₹133 in the short term. A further break below this base will strengthen the intermediate-term downtrend that has been in place since encountering a vital resistance at ₹170 in early June 2018.

A strong rally above ₹155 is required to alter this downtrend and take the contract higher to ₹160 levels. Key supports below ₹133 are at ₹130 and ₹125 levels. Traders with a short-term view should tread with caution and consider initiating fresh long positions on a decisive rally above ₹140 with a fixed stop-loss.

Global trend

The Lead (three-month forward) contract on the London Metal Exchange has been on a sideways consolidation phase in the band between $1,900 and $2,020 per tonne since mid-October 2018.

The LME-Lead contract can remain in this sideways range for a while. The contract is heading higher to test $2,000 and $2,020 — the upper end of the range in the near term. A break above this level can strengthen the upmove and take the metal price higher to $2,100. But a fall below the key support at $1,900 can drag the contract down to $1,850 levels.

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

 

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