Technical Analysis

Resistance caps the upside in MCX-Lead

BL Research Bureau | Updated on December 13, 2018 Published on December 13, 2018

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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