The Lead futures contract on the Multi Commodity Exchange (MCX) has been stuck in a sideways range for a prolonged period. The contract has been range-bound between ₹155 and ₹168 per kg for the last three months. Within this range, the contract fell to a low of ₹158.7 on last Friday and has since reversed higher. It is currently trading at ₹164.

Immediate resistance is at ₹166, which is likely to be tested in the near-term. Inability to break above this hurdle can pull the contact down to ₹160 or ₹159 again. However, the downside is expected to be limited as the 21-week moving average support at ₹158 has been providing strong support to the contract over the last several weeks. So, intermediate dips to this support are likely to attract fresh buyers.

This leaves the bias bullish on the charts. A strong break and a decisive close above ₹166 is needed for the contract to gain fresh momentum. Such a break will increase the likelihood of the contract breaching above ₹168 and rising to ₹173.

Traders with a medium-term perspective can make use of dips to go long at ₹160. Stop-loss can be placed at ₹154 for a target of ₹172. Revise the stop-loss higher to ₹163 as soon as the contract moves up to ₹165.

The contract will come under pressure only if it breaks below the 21-week moving average support decisively. Such a break can pull the contract lower to ₹155 initially. Further break below ₹155 will increase the selling pressure. In such a scenario, the possibility of the contract falling to ₹151 will be high.

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

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