The Lead futures contract on the Multi Commodity Exchange (MCX) continues to remain range-bound between ₹150 and ₹159 per kg. The contract has been stuck in this sideways range over the last couple of months. Within this range the contract was volatile in the past week. It rose to a high of ₹158.1 on Monday, but failed to sustain higher. The contract reversed sharply lower from this high and fell to a low of ₹150.65 on Wednesday. However, the contract has bounced slightly from this low and is currently trading at ₹152 per kg.

Mixed outlook

The prolonged sideways range movement keeps the outlook mixed and unclear for the MCX-Lead futures contract. Traders have to wait for a breakout on either side of ₹150 or ₹159 to get a clear cue on the next leg of move.

A break below ₹150 can pull the contract lower to ₹147. However, the downside is expected to be limited as a crucial long-term trend support is poised in the region between ₹147 and ₹146. An immediate break below ₹146 looks less probable. An upward reversal from the ₹147-₹146 support zone will ease the downside pressure. Such a reversal will be very bullish from a long-term perspective which will signal the beginning of a fresh leg of upmove. In that case the contract may have the potential to target ₹175 or even higher levels over the medium term. But, if the MCX-Lead futures contract breaks below ₹146, the downmove can extend to ₹143 and ₹140.

On the other hand, if the contract remains above ₹150 and manages to break the current range above ₹159, it can gain fresh momentum. The contract can target ₹165 and ₹167. Such an upmove 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.

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

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