Downtrend intensifies in MCX Lead

The Lead futures contract on the Multi Commodity Exchange (MCX) is under pressure. The contract has tumbled about 6 per cent in the past week from ₹164 per kg to the current levels of ₹154.

With this sharp fall in the past week, the downtrend in the contract has intensified. The indicators on the charts are also strengthens the bearish view. The 21-day moving average has crossed below the 55-day moving average — a bearish signal indicating that the upside could be limited.

A dip to test the immediate support at ₹152 is likely. However, an intermediate bounce from ₹152 towards ₹155 or higher levels cannot be ruled out. But strong resistance is in the ₹157-160 region which is likely to cap the upside in the short-term.

Further rally breaking above ₹160 is unlikely. The contract may remain range-bound between ₹152 and ₹160 for some time. However, the bias will continue to remain bearish.

An eventual break below ₹152 will see the down move extending towards ₹150 and ₹148. Traders can make use of rallies to go short at ₹157 and ₹159.

Stop-loss can be placed at ₹162 for the target of ₹148. Revise the stop-loss lower to ₹155 as soon as the contract moves down to ₹151.

The downside pressure will ease only if the contract manages to rise past ₹160 decisively. Such a break will negate the bearish outlook.

It will then increase the possibility of the contract rallying towards ₹165 and ₹170 levels again.

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

Published on March 08, 2018

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