Technical Analysis

Short-term outlook is bullish for MCX-Lead

Gurumurthy K BL Research Bureau | Updated on February 28, 2019 Published on February 28, 2019

The Lead futures contract on the MCX has risen sharply in the past week. The contract has surged about 5 per cent in the past week from around ₹145 per kg to the current levels of ₹152 per kg. The strong rally in the past week has taken the MCX-Lead futures contract well above the 200-DMA resistance level of ₹148.

The short-term outlook is bullish. Intermediate resistance is around ₹153.5. A strong break above it will increase the likelihood of the contract extending its upmove to ₹158 and ₹160 in the coming days. Such a rally will also increase the possibility of the contract revisiting ₹170 and ₹173 levels over the medium-term.

The MCX-Lead futures contract has been trading in a broad ₹132-175 range for a prolonged period of time. The sharp rise in the past week keeps this sideways range intact and has increased the possibility of the contract testing the upper end of this range in the coming weeks.

Trading strategy

High risk appetite traders with a short-term perspective can go long at current levels and also accumulate on dips at ₹150 and ₹149. Stop-loss can be placed at ₹146 for a target of ₹160. Revise the stop-loss higher to ₹154 as soon as the contract moves up to ₹156.

Global trend

The uptrend in the Lead (three-month forward) contract on the London Metal Exchange has gained momentum in the past week. The contract has surged over 4 per cent in the past week breaking above the key 200-DMA resistance. It is currently trading at $2,136 per tonne. The key supports at $2,110 and $2,080 can limit the downside in the short-term. As long as the contract trades above these supports, a rally to $2,200 looks likely in the coming sessions.

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

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