The lead futures contract on the Multi Commodity Exchange (MCX) fell by 3 per cent on Wednesday, after encountering a key resistance point at ₹150 per kg.
The contract witnessed selling pressure at higher levels. It now tests both the 21 and 50-day moving averages and is currently trading around ₹145.
The contract failed to move beyond the key resistance at ₹150 and resumed its downmove in early September. Since then, the contract has been in a sideways consolidation phase in the wide range between ₹142 and ₹150 with a negative bias.
An emphatic fall below the current support level at ₹145 can pull the contract down to ₹142 in the coming trading session. A further fall below the lower boundary of the sideways range at ₹142 will strengthen the medium-term downtrend that has been in place from the June high of ₹171. Subsequent downside targets are ₹140 and ₹137.
Conversely, if the contract rebounds from the lower boundary at 142, the sideways movement will be retained. A decisive breakthrough of the significant resistance at ₹150 will alter the sideways consolidation phase and take the contract northwards to ₹ 155 and ₹157 in the short term.
The next key resistance points beyond ₹157 are at ₹160 and ₹164. Traders with a short-term perspective should remain on the sidelines as long as the contract is range-bound between ₹142 and ₹150.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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