The Lead futures contract on the Multi Commodity Exchange (MCX) has failed to breach the 200-day moving average resistance in the past week as expected. The contract made a high of ₹158.1 per kg on April 19 and has come-off from there. It is currently trading at ₹154 per kg.

Outlook unclear

The MCX-Lead futures contract has been stuck inside a sideways range between ₹150 and ₹159 over the last several weeks. This leaves the immediate outlook unclear for the contract. A breakout on either side of ₹150 or ₹159 will determine the next move.

A strong break below ₹150 can take the contract lower to ₹147. The region between ₹147 and ₹146 is a crucial long-term support zone which is likely to limit the downside. An immediate fall below ₹146 looks less probable. A strong upward reversal from this support zone will be bullish from a long-term perspective. Such a move could signal the beginning of a fresh leg of a long-term upmove which may have the potential to target ₹175 or even higher levels. But, if the MCX-Lead futures contract breaks below ₹146, the down-move can extend to ₹143 and ₹140 thereafter.

On the other hand, if the contract sustains above ₹150 and manages to break the current range above ₹159, it can gain fresh momentum. Such a break can take the contract higher to ₹165 and ₹167. It will also increase the possibility of the contract revisiting ₹170 and ₹172 levels over the medium term.

Trading strategy

Traders can stay out of the market until the range breakout gives a clear indication of the next trend for the contact.

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

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