Gurumurthy K The Lead futures contract on the Multi Commodity Exchange of India (MCX) seems to be losing momentum. The bounceback move in the MCX-Lead futures contract that has been in place since the beginning of this month appears to have halted this week. The contract made a high of ₹144.45 per kg on Monday and came off from there. The contract has been range-bound between ₹140 and ₹144 since then. It is currently trading at ₹141 per kg.
The 100-day moving average resistance at ₹144.2 has halted the up move. This resistance has been capping the upside all through this week. The contract needs to breach this hurdle decisively in order to regain strength. A strong break and a decisive close above ₹144 will increase the likelihood of the contract rallying towards ₹151 in the coming days. Inability to breach ₹151 can trigger a pull back move to ₹149 or ₹146 thereafter. But a strong break above ₹151 will see the up move extending towards ₹155 and ₹156.
On the other hand, if the MCX-Lead futures contract fails to break above ₹144 and declines below ₹141, it can fall initially to ₹139. A further break below ₹139 will increase the downside pressure. Such a break can drag the MCX-Lead futures contract lower to ₹136 or even ₹133.
Short-term traders can go long on a break above ₹144. Stop-loss can be placed at ₹141 for a target of ₹151. Revise the stop-loss higher to ₹146 as soon as the contract moves up to ₹148.
Range-bound in LME
The Lead (three-month forward) contract on the LME has been trading range-bound in the band between $1,900 and $2,030 per tonne over the last one month. The contract continues to test the upper boundary and trades at around $1,976. A break above $2030 can take the contract northwards to $2,100 and then to $2,150 in the short term. Key supports are pegged at $1,950 and $1,900 levels.
(Note: The recommendations are based on technical analysis and there is a risk of loss in trading.)
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