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The October futures contract of lead in Multi Commodity Exchange (MCX) had been on a decline since early September. However, after making a low of ₹141.6 last week, it has reversed the direction upwards. Consequently, the contract has crossed over a strong resistance at ₹148, where the 21-day moving average and the 38.2 per cent Fibonacci retracement level of the prior downtrend coincide, opening the door for further strengthening.
Supporting the positive outlook of the contract, the daily relative strength index has started moving on the upside and last week, it went past the midpoint level of 50. The moving average convergence divergence indicator in the daily chart, which has been pointing downwards, has turned the trajectory upwards. Also, the price action is showing signs of considerable bullish momentum.
Given the above factors, the contract will most likely rally from the current levels. The first roadblock it can face is at ₹154. Beyond that level, ₹158 can act as a strong hurdle. Hence, traders can initiate fresh long positions in dips with stop-loss at ₹145.
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